HORNGRENS COST ACCOUNTING W/ACCESS
16th Edition
ISBN: 9781323687604
Author: Datar
Publisher: PEARSON
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Question
Chapter 11, Problem 11.31E
To determine
Contribution Margin:
The amount of the contribution margin is the difference between the selling price of per unit and variable cost of per unit. Here contribution is the part of the sales revenue.
Operating Income:
The outcome of deduction of operating expense and
Variable Cost:
The Variable cost is that cost which varies with increase or decrease in the level of production. The Variable cost of per unit remains same. Here, it can be said that variable cost has the positive relationship with output of production.
Fixed Cost:
The Fixed cost is that cost which does not change with increase or decrease in the level of production, but per unit fixed changes with change in the level production. Examples of the fixed cost are rent, wages and insurance.
To determine: Action taken by N to maximize its operating income and factor that should be considered before making decision.
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Southern Tier Heating, Inc. installs heating systems in new homes built in the southern tier counties of New York state. Jobs are priced using the time and materials method. The president of Southern Tier Heating, EIwing, is pricing a job involving the heating systems for six houses to be built by a local developer. He has made the following estimates.
Material cost $ 60,000
Labor hours 400
The following predictions pertain to the company’s operations for the next year.
Labor rate, including fringe benefits $ 16.00 per hour
Annual labor hours 12,000 hours
Annual overhead costs:
Material handling and storage $ 25,000
Other overhead costs $ 108,000
Annual cost of materials used $ 250,000
Perbanas adds a markup of $ 4 per hour on its time charges, but there is no markup on material costs.
Required:
1. Calculate the company's time charges and the material charges percentage.
2. Compute the price for the job
3. What would be the price of the job if Perbanas also added a markup of 10 % on…
PERBANAS, Inc. installs heating systems in new homes built in the southern tier counties of New York state. Jobs are priced using the time and materials method. The president of PERBANAS, Fenturini, is pricing a job involving the heating systems for six houses to be built by a local developer. He has made the following estimates.
Material cost $ 30,000
Labor hours 200
The following predictions pertain to the company’s operations for the next year.
Labor rate, including fringe benefits $ 8.00 per hour
Annual labor hours 6,000 hours
Annual overhead costs:
Material handling and storage $ 12,500
Other overhead costs $ 54,000
Annual cost of materials used $ 125,000
Perbanas adds a markup of $ 2 per hour on its time charges, but there is no markup on material costs.
Required:
1. Calculate the company's time charges and the material charges percentage.
2. Compute the price for the job
3. What would be the price of the job if Perbanas also added a markup of 5 % on all material charges…
Chapter 11 Solutions
HORNGRENS COST ACCOUNTING W/ACCESS
Ch. 11 - Prob. 11.1QCh. 11 - Define relevant costs. Why are historical costs...Ch. 11 - All future costs are relevant. Do you agree? Why?Ch. 11 - Distinguish between quantitative and qualitative...Ch. 11 - Describe two potential problems that should be...Ch. 11 - Variable costs are always relevant, and fixed...Ch. 11 - A component part should be purchased whenever the...Ch. 11 - Prob. 11.8QCh. 11 - Managers should always buy inventory in quantities...Ch. 11 - Management should always maximize sales of the...
Ch. 11 - Prob. 11.11QCh. 11 - Cost written off as depreciation on equipment...Ch. 11 - Managers will always choose the alternative that...Ch. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Qualitative and quantitative factors. Which of the...Ch. 11 - Special order, opportunity cost. Chade Corp. is...Ch. 11 - Prob. 11.18MCQCh. 11 - Keep or drop a business segment. Lees Corp. is...Ch. 11 - Relevant costs. Ace Cleaning Service is...Ch. 11 - Disposal of assets. Answer the following...Ch. 11 - Relevant and irrelevant costs. Answer the...Ch. 11 - Multiple choice. (CPA) Choose the best answer. 1....Ch. 11 - Special order, activity-based costing. (CMA,...Ch. 11 - Make versus buy, activity-based costing. The...Ch. 11 - Inventory decision, opportunity costs. Best Trim,...Ch. 11 - Relevant costs, contribution margin, product...Ch. 11 - Selection of most profitable product. Body Image,...Ch. 11 - Theory of constraints, throughput margin, relevant...Ch. 11 - Closing and opening stores. Sanchez Corporation...Ch. 11 - Prob. 11.31ECh. 11 - Relevance of equipment costs. Janets Bakery is...Ch. 11 - Equipment upgrade versus replacement. (A. Spero,...Ch. 11 - Special order, short-run pricing. Diamond...Ch. 11 - Short-run pricing, capacity constraints. Fashion...Ch. 11 - International outsourcing. Riverside Clippers Corp...Ch. 11 - Relevant costs, opportunity costs. Gavin Martin,...Ch. 11 - Opportunity costs and relevant costs. Jason Wu...Ch. 11 - Opportunity costs. (H. Schaefer, adapted) The Wild...Ch. 11 - Make or buy, unknown level of volume. (A....Ch. 11 - Make versus buy, activity-based costing,...Ch. 11 - Prob. 11.42PCh. 11 - Product mix, special order. (N. Melumad, adapted)...Ch. 11 - Theory of constraints, throughput margin, and...Ch. 11 - Theory of constraints, contribution margin,...Ch. 11 - Closing down divisions. Ainsley Corporation has...Ch. 11 - Dropping a product line, selling more tours....Ch. 11 - Prob. 11.48PCh. 11 - Dropping a customer, activity-based costing,...Ch. 11 - Equipment replacement decisions and performance...
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