Taylor Inc. produces summer dresses for women. Their dresses are made of cotton fabrics. The line workers are paid an hourly wage and the production supervisor is paid an annual salary. The products are tested for quality control by an independent party which charges a set price per month and an additional charge for each item tested. The machineries are depreciated on a straight-line basis. Which of the following items should be classified as a mixed cost? Group of answer choices Quality control costs Depreciation of the machineries Production supervisor’s salary Cotton fabrics
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Taylor Inc. produces summer dresses for women. Their dresses are made of cotton fabrics. The line workers are paid an hourly wage and the production supervisor is paid an annual salary. The products are tested for quality control by an independent party which charges a set price per month and an additional charge for each item tested. The machineries are
Which of the following items should be classified as a mixed cost?
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- Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates: Activity Coat Pool Supporting direct labor Order processing Custom design processing Customer service Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Direct labor-houra per glider Activity Rate $ 20 per direct labor-hour $ 198 per order $267 per custom design $ 420 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $20 per hour. Customer margin Standard Model 14 2 0 27.50 $1,875 $ 472 Custom Design 2 2 2 34.00 $ 2,490 $586 Required: Using the company's…Baird Chairs, Incorporated makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Direct Cost per Unit Direct materials Direct labor Category Unit level Batch level Product level Facility level Total Model Diamond (D) $19.50 per unit $ 19.10/hour x 2.00 hours production time Type of Product Estimated Cost $ 247,500 825,000 704,000 572,000 $ 2,348,500 a. Model Diamond a. Model Gold b. Model Diamond b. Model Gold Cost Driver Number of units. Number of setups Number of TV commercials Number of machine hours The market price for office chairs comparable to Model Diamond is $118 and to Model Gold is $75. Cost per Unit Model Gold (G) $9.90 per…Sama Company is a contract manufacturer for a variety of pharmaceutical and over-the-counter products. It has a reputation for operational excellence and boasts a normal spoilage rate of 2% of normal input. Normal spoilage is recognized during the budgeting process and is classified as a component of manufacturing overhead when determining the overhead rate. Lynn Sanger, one of Flextron’s quality control managers, obtains the following information for Job No. M102, an order from a consumer products company. The order was completed recently, just before the close of Flextron’s fiscal year. The units will be delivered early in the next accounting period. A total of 128,500 units were started, and 6,000 spoiled units were rejected at final inspection, yielding 122,500 good units. Spoiled units were sold at $4 per unit. Sanger indicates that all spoilage was related to this specific job. The total costs for all 128,500 units of Job No. M102 follow. The job has been completed, but the costs…
- Mozaic Inc. has decided to introduce a new product, which can be manufactured by either a computer-assisted manufacturing system (CAM) or a labor-intensive production system (LIP). The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows: CAM System LIP System Direct Material $5.00 $5.60 Direct Labor (DLH) 0.5 DLH x $12 $6.00 0.8 DLH x $9 $7.20 Variable Overhead 0.5 DLH x $6 $3.00 0.8 DLH x $6 $4.80 Fixed Overhead* $2,440,000 $1,320,000 * These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. The company's marketing research department has recommended an introductory unit sales price of $30. Selling expenses are estimated to be $500,000 annually plus $2 for each unit sold. (Ignore income taxes.) Required: 1. Calculate the estimated break-even point in annual unit sales of the new product if the company uses the (a) computer-assisted…Watertime inc. manufactures old fashioned grandfather clocks. The production utilizes a highly automated assembly line. The firm has identified two cost categories: direct materials and conversion costs. During the production process each clock moves first through the Assembly Department, where materials are added and the clock is assembled, then through the Testing Department, where the clock is inspected for quality control. All direct materials are added at the beginning of the production process but conversion costs are allocated evenly throughout production. Spartans Inc. uses weighted-average costing. Data for Department A for June 2020 are: Beginning WiP Inventory 320 units Direct Materials (100% complete) Conversion (35% complete) Units started during June 750 units Ending WiP Inventory June 30 300 units Direct…Marigold, Ltd. manufactures shirts, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows. Direct materials Direct labor Variable overhead Fixed overhead Indirect material Indirect labor Equipment repair Equipment power Total Supervisory salaries Insurance Property taxes Depreciation Standard Price $3 per yard $14 per DLH $3.20 per DLH $3 per DLH Utilities Quality inspection Total Sandy Robison, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Sandy asked CFO Suzy Summers for more information. She provided the following overhead budgets, along with the actual results for November. Annual Budget $449,000 The company purchased 82,000 yards of fabric and used 93,600 yards of fabric during the month. Fabric purchases during the month were made at $2.80 per yard. The direct labor payroll ran…
- Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM). and organized as a separate division within the company. Most manufacturing plants at MM use an ABC system, but UM has always used a traditional product costing system. Bob Miller, the plant controller at UM, has decided to experiment with ABC and has asked you to help develop a simple ABC system that would help him decide if it was useful. The controller's staff has identified costs for the first month in the four overhead cost pools along with appropriate cost drivers for each pool. Activity Drivers Direct material cost Costs 154, 000 1,600, 900 900, 000 450, 000 Cost Pools Incoming inspection Production Machine-hours Machine setup Shipping Setups Units shipped The company manufactures two basic products with model numbers 308 and 510. The following are data for production for the first month as part of MM. Products 308 510 $ 45,000 $173,800 50,000 $ 32,000 $283,809 118,800 Total direct material costs Total…Impress, Inc., makes books and is trying to decide whether one particular book which sells for $25 should be printed in-house or outsourced. For each of the following items, indicate if it is relevant or irrelevant to the decision. - Labor rate for printing -Allocated fixed overhead (unavoidable) -Quality of pages printed by the outside printing companySama Company is a contract manufacturer for a variety of pharmaceutical and over-the-counter products. It has a reputation for operational excellence and boasts a normal spoilage rate of 2% of normal input. Normal spoilage is recognized during the budgeting process and is classified as a component of manufacturing overhead when determining the overhead rate. Lynn Sanger, one of Flextron’s quality control managers, obtains the following information for Job No. M102, an order from a consumer products company. The order was completed recently, just before the close of Flextron’s fiscal year. The units will be delivered early in the next accounting period. A total of 128,500 units were started, and 6,000 spoiled units were rejected at final inspection, yielding 122,500 good units. Spoiled units were sold at $4 per unit. Sanger indicates that all spoilage was related to this specific job. The total costs for all 128,500 units of Job No. M102 follow. The job has been completed, but the costs…
- Mission Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the information provided below. (CMA adapted) Multiple Choice Units produced Material moves per product line Direct labor-hours per product line Budgeted material handling costs: $279,500 Under an activity-based costing (ABC) system, the materials handling costs allocated to one unit of Specialty Windows would be: $6,450.00. $2,170.68. $12,900.00. Wall Mirrors 220 5 1,100 $10,320.00. Specialty Windows 20 60 1,200Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Activity Rate $20 per direct labor-hour $186 per order. $257 per custom design $ 428 per customer Standard Model Direct labor-hours per glider Selling price per glider Direct materials cost per glider The company's direct labor rate is $20 per hour. Customer margin 12 1 0 27.50 $ 1,825 $ 458 Custom Design 3 3 3 32.00 $ 2,440 $ 566 Required: Using the company's activity-based…Sokolov Office Decor produces commercial office furnishing for educational institutions, hospitals, and offices. The company uses a job costing system to record its costs. A recent order for 2,500 sections of wall units had the following costs per unit: Direct materials $300 Direct labour $200 Manufacturing overhead allocated $100 $600 Refer to the original data. Inspectors at the company rejected 200 of the 2,500 wall units due to dents and scratches. The wall units were sold to a local contractor at a discount for $40,000. The contractor used the units to furnish a building. Assume this rejection rate is considered normal. Prepare the journal entry and calculate the unit cost if the rejection is attributable to this particular job. Cost per unit - $634.78Prepare the journal entry and calculate the unit cost if the rejection is…
