View PoliciesCurrent Attempt in ProgressHartley Company produces two products, Flower andPlanter. Flower is a high-volume item totaling 20000 unitsannually. Planter is a low-volume item totaling only 6000unitsper year. Flower requires 1 hour of direct labor forcompletion, while each unit of Planter requires 2 hours.Therefore, total annual direct labor hours are 32000(20000+ 12000). Expected arnnual manufacturingoverhead costs are $660000. Hartley uses a traditionalcosting system and assigns overhead based on direct laborhours. Each unit of Planter would be assigned overhead ofO need more information to compute.O $25.38.O $20.63.O $41.25.

Meaning of Direct labor overhead:Direct Labor cost such as payment for production hours are directly…

Answered: View Policies Current Attempt in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Han Products manufactures 22,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 3.60 10.00 2.40 6.00 $ 22.00 An outside supplier has offered to sell 22,000 units of part S-6 each year to Han Products for $20 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $72,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer?
Ahrends Corporation makes 44,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $ 23.80 Direct labor 27.70 Variable manufacturing overhead 8.70 Fixed manufacturing overhead 39.70 Unit product cost $ 99.90 An outside supplier has offered to sell the company all of these parts it needs for $86.20 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $286,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $34.40 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's…
Ahrends Corporation makes 46,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 14.30 23.90 3.00 28.30 $69.50 An outside supplier has offered to sell the company all of these parts it needs for $55.80 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $368,000 per year If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $24.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products What…
Rooney Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* $ 5,200 6,500 3,600 9,300 26,600 Allocated facility-level costs *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rooney for $2.70 each. Required a. Calculate the total relevant cost. Should Rooney continue to make the containers? b. Rooney could lease the space it currently uses in the manufacturing process. If leasing would produce $11,500 per month, calculate the total avoidable costs. Should Rooney continue to make the containers? a. Total relevant cost Should Rooney continue to make the containers? b. Total avoidable cost Should Rooney continue to make the containers?
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Ahrends Corporation makes 43,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 12.80 23.30 2.10 26.50 $ 64.70 An outside supplier has offered to sell the company all of these parts it needs for $51.00 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $301,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $23.40 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.…
Calculate the original overhead absorption rate Southpeak plc manufactures two products, Alflon and Bur, in one of its factories. Product Alflon is a high-volume item, sales of which are 15,000 units each year, while Product Bur is a low-volume item, sales of which are only 8,000 units a year. Alflon products require two direct labour hours, and the Bur products require four direct labour hours per unit, which are currently used as the basis for assigning overhead cost to the products. The company’s overhead costs total $1,070,450 each year. Unit selling prices, costs for materials and labour in the factory of the two products are as follows: Product Alflon ($) Product Bur ($) Selling Price 89 115 Direct Labour (at $10 per hour) 20 40 Direct Materials 15 15
Thornton Electronics currently produces the shipping containers It uses to deliver the electronics products It sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 5,100 6,400 3,300 9,900 28,000 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Thornton for $2.60 each. Required a. Calculate the total relevant cost. Should Thornton continue to make the containers? b. Thornton could lease the space it currently uses in the manufacturing process. If leasing would produce $12,100 per month, calculate the total avoidable costs. Should Thornton continue to make the containers? a. Total relevant cost a. Should Thornton continue to make the containers? b. Total avoidable cost b. Should Thornton continue to make the containers?
Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta $ 30 $ 10 Direct materials Direct labor 22 Variable manufacturing overhead 20 Traceable fixed manufacturing overhead 24 Variable selling expenses 20 Common fixed expenses 23 Total cost per unit $ 139 $ 112 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 29 13 26 16 18 14. Assume that Cane's customers would buy a maximum of 88,000 units of Alpha and 68,000 units of Beta. Also assume that the raw material available for production is limited to 172,000 pounds. What is the total contribution margin…
Garcia Co. sells snowboards. Each snowboard requires direct materials of $100, direct labor of $30, and variable overhead of $45. The company expects fixed overhead costs of $635,000 and fixed selling and administrative costs of $115,000 for the next year. It expects to produce and sell 10,000 snowboards in the next year. What will be the selling price per unit if Garcia uses a markup of 15% of total cost?
Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $37 each. The company is considering making the switches internally at the following projected annual production costs: Unit-level material cost Unit-level labor cost Unit-level overhead Batch-level set-up cost (6,000 units per batch) Product-level supervisory salaries Allocated facility-level costs $6 $5 $4 $48,000 $49,000 $43,000 The company expects an annual need for 6.000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $3,800 a month. If the company decides to make the parts, total costs will be:
Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Alpha $ 30 Beta $ 12 Direct labor 20 15 Variable manufacturing overhead 7 5 Traceable fixed manufacturing overhead 16 18 Variable selling expenses 12 8 Common fixed expenses 15 10 Total cost per unit $ 100 $ 68 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 6. Assume that Cane normally produces and sells 90,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

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