Calculate the relevant manufacturing cost per fan.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 11, Problem 36P

1.

To determine

Calculate the relevant manufacturing cost per fan.

1.

Expert Solution

Explanation of Solution

Calculate the relevant manufacturing cost per fan as follows:

Particulars	Amount ($)
Electric motor	$6.00
Other parts	$8.00
Direct labor	$15.00
Variable manufacturing overhead (1)	$5.00
Relevant manufacturing cost per unit	$ 34.00

Table (1)

Working note (1):

Calculate the variable manufacturing overhead cost per unit.

$Variable manufacturing overhead cost per unit}=(Total overhead cost per unit−(Total fixed costProduction fans))=($15 per unit−$100,00010,000 units)=$15 per unit−$10 per unit=$5 per unit$

2.

To determine

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan.

2.

Expert Solution

Explanation of Solution

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan as follows:

Particulars	Units
Fans produced internally (current capacity)	15,000
Less: Fans purchased from external supplier $(20,000−15,000)$	5,000
Total sales volume (units)	20,000

Table (1)

Total contribution margin under optimum plan.

$Total contribution margin} =[(Current capacity×Contribution margin per unit (2) )+(Fans purchased from external supplier×Contribution margin per unit )]=[(15,000 unit ×$24)+(5,000 units×$12)]=$360,000+60,000=$420,000$

Working note (2):

Calculate contribution margin per unit for current capacity (15,000 units).

$Contribution margin per unit}=(Selling price per unit−Relevant cost per unit−Variable cost per unit)=$72−$34−$12=$24$

3.

To determine

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not.

3.

Expert Solution

Explanation of Solution

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not as follows:

Particulars	Amount ($)
Selling price per unit	$ 60.00
Less: Variable cost per unit
Electric motor	$ 5.50
Other parts	$ 7.00
Direct labor @$15 per unit	$ 7.50
Manufacturing overhead (3)	$ 5.00
Selling and administrative costs (4)	$ 17.60
Contribution margin per unit	$ 17.40

Table (1)

$Contribution margin = (Normal production×Contribution margin per unit)=25,000 units×$17.40 per unit=$435,000$

In this case, total contribution margin from making pumps is more than the total contribution margin for making fans. Hence, company should produce the pumps.

Working note (3):

Calculate the variable overhead cost per marine pump.

$Variable overheadcost per marine pump}=(Total overheade cost−Fixed overhead)Production capacity=$225,000−$100,00025,000 units=$5 per unit$

Note: Total variable overhead cost is $225,000 $(25,000 pumps×$9 per unit)$

Working note (4):

Calculate the variable selling/administrative cost per marine pump.

$Variable selling/administrativecost per marine pump}=(Total selling\administrative cost−Fixed portion)Production capacity=$500,000−$60,00025,000 units=$17.60 per unit$

Note: Total variable overhead cost is $500,000 $(25,000 pumps×$20 per unit)$

4.

To determine

State the strategic factors that are related to company M’s decisions.

4.

Expert Solution

Explanation of Solution

State the strategic factors that are related to company M’s decisions as follows:

New market and customer benefits for other product line.
Critical success factors related pumps and fans.
Market research of pump sales.
Positive and negative image for pump sales.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Superior Manufacturing uses a predetermined overhead rate based on direct labor hours to allocate manufacturing overhead to production jobs. For 2024, the company's budget includes estimated manufacturing overhead of $720,000 and estimated direct labor hours of 20,000. In March, the production department completed Job #304, which required $8,200 in direct materials and $4,500 in direct labor (representing 250 hours at $18 per hour). The cost accountant needs to determine the predetermined overhead rate, the manufacturing overhead allocated to Job #304, and the total cost of this job.

Hi experts please provide answer this accounting question

Please explain this financial accounting problem with accurate financial standards.

Answer 2

Question

Chapter 11, Problem 36P

1.

To determine

Calculate the relevant manufacturing cost per fan.

1.

Expert Solution

Explanation of Solution

Calculate the relevant manufacturing cost per fan as follows:

Particulars	Amount ($)
Electric motor	$6.00
Other parts	$8.00
Direct labor	$15.00
Variable manufacturing overhead (1)	$5.00
Relevant manufacturing cost per unit	$ 34.00

Table (1)

Working note (1):

Calculate the variable manufacturing overhead cost per unit.

$Variable manufacturing overhead cost per unit}=(Total overhead cost per unit−(Total fixed costProduction fans))=($15 per unit−$100,00010,000 units)=$15 per unit−$10 per unit=$5 per unit$

2.

To determine

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan.

2.

Expert Solution

Explanation of Solution

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan as follows:

Particulars	Units
Fans produced internally (current capacity)	15,000
Less: Fans purchased from external supplier $(20,000−15,000)$	5,000
Total sales volume (units)	20,000

Table (1)

Total contribution margin under optimum plan.

$Total contribution margin} =[(Current capacity×Contribution margin per unit (2) )+(Fans purchased from external supplier×Contribution margin per unit )]=[(15,000 unit ×$24)+(5,000 units×$12)]=$360,000+60,000=$420,000$

Working note (2):

Calculate contribution margin per unit for current capacity (15,000 units).

$Contribution margin per unit}=(Selling price per unit−Relevant cost per unit−Variable cost per unit)=$72−$34−$12=$24$

3.

To determine

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not.

3.

Expert Solution

Explanation of Solution

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not as follows:

Particulars	Amount ($)
Selling price per unit	$ 60.00
Less: Variable cost per unit
Electric motor	$ 5.50
Other parts	$ 7.00
Direct labor @$15 per unit	$ 7.50
Manufacturing overhead (3)	$ 5.00
Selling and administrative costs (4)	$ 17.60
Contribution margin per unit	$ 17.40

Table (1)

$Contribution margin = (Normal production×Contribution margin per unit)=25,000 units×$17.40 per unit=$435,000$

In this case, total contribution margin from making pumps is more than the total contribution margin for making fans. Hence, company should produce the pumps.

Working note (3):

Calculate the variable overhead cost per marine pump.

$Variable overheadcost per marine pump}=(Total overheade cost−Fixed overhead)Production capacity=$225,000−$100,00025,000 units=$5 per unit$

Note: Total variable overhead cost is $225,000 $(25,000 pumps×$9 per unit)$

Working note (4):

Calculate the variable selling/administrative cost per marine pump.

$Variable selling/administrativecost per marine pump}=(Total selling\administrative cost−Fixed portion)Production capacity=$500,000−$60,00025,000 units=$17.60 per unit$

Note: Total variable overhead cost is $500,000 $(25,000 pumps×$20 per unit)$

4.

To determine

State the strategic factors that are related to company M’s decisions.

4.

Expert Solution

Explanation of Solution

State the strategic factors that are related to company M’s decisions as follows:

New market and customer benefits for other product line.
Critical success factors related pumps and fans.
Market research of pump sales.
Positive and negative image for pump sales.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 11, Problem 36P

1.

To determine

Calculate the relevant manufacturing cost per fan.

1.

Expert Solution

Explanation of Solution

Calculate the relevant manufacturing cost per fan as follows:

Particulars	Amount ($)
Electric motor	$6.00
Other parts	$8.00
Direct labor	$15.00
Variable manufacturing overhead (1)	$5.00
Relevant manufacturing cost per unit	$ 34.00

Table (1)

Working note (1):

Calculate the variable manufacturing overhead cost per unit.

$Variable manufacturing overhead cost per unit}=(Total overhead cost per unit−(Total fixed costProduction fans))=($15 per unit−$100,00010,000 units)=$15 per unit−$10 per unit=$5 per unit$

2.

To determine

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan.

2.

Expert Solution

Explanation of Solution

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan as follows:

Particulars	Units
Fans produced internally (current capacity)	15,000
Less: Fans purchased from external supplier $(20,000−15,000)$	5,000
Total sales volume (units)	20,000

Table (1)

Total contribution margin under optimum plan.

$Total contribution margin} =[(Current capacity×Contribution margin per unit (2) )+(Fans purchased from external supplier×Contribution margin per unit )]=[(15,000 unit ×$24)+(5,000 units×$12)]=$360,000+60,000=$420,000$

Working note (2):

Calculate contribution margin per unit for current capacity (15,000 units).

$Contribution margin per unit}=(Selling price per unit−Relevant cost per unit−Variable cost per unit)=$72−$34−$12=$24$

3.

To determine

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not.

3.

Expert Solution

Explanation of Solution

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not as follows:

Particulars	Amount ($)
Selling price per unit	$ 60.00
Less: Variable cost per unit
Electric motor	$ 5.50
Other parts	$ 7.00
Direct labor @$15 per unit	$ 7.50
Manufacturing overhead (3)	$ 5.00
Selling and administrative costs (4)	$ 17.60
Contribution margin per unit	$ 17.40

Table (1)

$Contribution margin = (Normal production×Contribution margin per unit)=25,000 units×$17.40 per unit=$435,000$

In this case, total contribution margin from making pumps is more than the total contribution margin for making fans. Hence, company should produce the pumps.

Working note (3):

Calculate the variable overhead cost per marine pump.

$Variable overheadcost per marine pump}=(Total overheade cost−Fixed overhead)Production capacity=$225,000−$100,00025,000 units=$5 per unit$

Note: Total variable overhead cost is $225,000 $(25,000 pumps×$9 per unit)$

Working note (4):

Calculate the variable selling/administrative cost per marine pump.

$Variable selling/administrativecost per marine pump}=(Total selling\administrative cost−Fixed portion)Production capacity=$500,000−$60,00025,000 units=$17.60 per unit$

Note: Total variable overhead cost is $500,000 $(25,000 pumps×$20 per unit)$

4.

To determine

State the strategic factors that are related to company M’s decisions.

4.

Expert Solution

Explanation of Solution

State the strategic factors that are related to company M’s decisions as follows:

New market and customer benefits for other product line.
Critical success factors related pumps and fans.
Market research of pump sales.
Positive and negative image for pump sales.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 11, Problem 36P

1.

To determine

Calculate the relevant manufacturing cost per fan.

1.

Expert Solution

Explanation of Solution

Calculate the relevant manufacturing cost per fan as follows:

Particulars	Amount ($)
Electric motor	$6.00
Other parts	$8.00
Direct labor	$15.00
Variable manufacturing overhead (1)	$5.00
Relevant manufacturing cost per unit	$ 34.00

Table (1)

Working note (1):

Calculate the variable manufacturing overhead cost per unit.

$Variable manufacturing overhead cost per unit}=(Total overhead cost per unit−(Total fixed costProduction fans))=($15 per unit−$100,00010,000 units)=$15 per unit−$10 per unit=$5 per unit$

2.

To determine

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan.

2.

Expert Solution

Explanation of Solution

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan as follows:

Particulars	Units
Fans produced internally (current capacity)	15,000
Less: Fans purchased from external supplier $(20,000−15,000)$	5,000
Total sales volume (units)	20,000

Table (1)

Total contribution margin under optimum plan.

$Total contribution margin} =[(Current capacity×Contribution margin per unit (2) )+(Fans purchased from external supplier×Contribution margin per unit )]=[(15,000 unit ×$24)+(5,000 units×$12)]=$360,000+60,000=$420,000$

Working note (2):

Calculate contribution margin per unit for current capacity (15,000 units).

$Contribution margin per unit}=(Selling price per unit−Relevant cost per unit−Variable cost per unit)=$72−$34−$12=$24$

3.

To determine

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not.

3.

Expert Solution

Explanation of Solution

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not as follows:

Particulars	Amount ($)
Selling price per unit	$ 60.00
Less: Variable cost per unit
Electric motor	$ 5.50
Other parts	$ 7.00
Direct labor @$15 per unit	$ 7.50
Manufacturing overhead (3)	$ 5.00
Selling and administrative costs (4)	$ 17.60
Contribution margin per unit	$ 17.40

Table (1)

$Contribution margin = (Normal production×Contribution margin per unit)=25,000 units×$17.40 per unit=$435,000$

In this case, total contribution margin from making pumps is more than the total contribution margin for making fans. Hence, company should produce the pumps.

Working note (3):

Calculate the variable overhead cost per marine pump.

$Variable overheadcost per marine pump}=(Total overheade cost−Fixed overhead)Production capacity=$225,000−$100,00025,000 units=$5 per unit$

Note: Total variable overhead cost is $225,000 $(25,000 pumps×$9 per unit)$

Working note (4):

Calculate the variable selling/administrative cost per marine pump.

$Variable selling/administrativecost per marine pump}=(Total selling\administrative cost−Fixed portion)Production capacity=$500,000−$60,00025,000 units=$17.60 per unit$

Note: Total variable overhead cost is $500,000 $(25,000 pumps×$20 per unit)$

4.

To determine

State the strategic factors that are related to company M’s decisions.

4.

Expert Solution

Explanation of Solution

State the strategic factors that are related to company M’s decisions as follows:

New market and customer benefits for other product line.
Critical success factors related pumps and fans.
Market research of pump sales.
Positive and negative image for pump sales.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 11, Problem 36P

1.

To determine

Calculate the relevant manufacturing cost per fan.

1.

Expert Solution

Explanation of Solution

Calculate the relevant manufacturing cost per fan as follows:

Particulars	Amount ($)
Electric motor	$6.00
Other parts	$8.00
Direct labor	$15.00
Variable manufacturing overhead (1)	$5.00
Relevant manufacturing cost per unit	$ 34.00

Table (1)

Working note (1):

Calculate the variable manufacturing overhead cost per unit.

$Variable manufacturing overhead cost per unit}=(Total overhead cost per unit−(Total fixed costProduction fans))=($15 per unit−$100,00010,000 units)=$15 per unit−$10 per unit=$5 per unit$

2.

To determine

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan.

2.

Expert Solution

Explanation of Solution

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan as follows:

Particulars	Units
Fans produced internally (current capacity)	15,000
Less: Fans purchased from external supplier $(20,000−15,000)$	5,000
Total sales volume (units)	20,000

Table (1)

Total contribution margin under optimum plan.

$Total contribution margin} =[(Current capacity×Contribution margin per unit (2) )+(Fans purchased from external supplier×Contribution margin per unit )]=[(15,000 unit ×$24)+(5,000 units×$12)]=$360,000+60,000=$420,000$

Working note (2):

Calculate contribution margin per unit for current capacity (15,000 units).

$Contribution margin per unit}=(Selling price per unit−Relevant cost per unit−Variable cost per unit)=$72−$34−$12=$24$

3.

To determine

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not.

3.

Expert Solution

Explanation of Solution

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not as follows:

Particulars	Amount ($)
Selling price per unit	$ 60.00
Less: Variable cost per unit
Electric motor	$ 5.50
Other parts	$ 7.00
Direct labor @$15 per unit	$ 7.50
Manufacturing overhead (3)	$ 5.00
Selling and administrative costs (4)	$ 17.60
Contribution margin per unit	$ 17.40

Table (1)

$Contribution margin = (Normal production×Contribution margin per unit)=25,000 units×$17.40 per unit=$435,000$

In this case, total contribution margin from making pumps is more than the total contribution margin for making fans. Hence, company should produce the pumps.

Working note (3):

Calculate the variable overhead cost per marine pump.

$Variable overheadcost per marine pump}=(Total overheade cost−Fixed overhead)Production capacity=$225,000−$100,00025,000 units=$5 per unit$

Note: Total variable overhead cost is $225,000 $(25,000 pumps×$9 per unit)$

Working note (4):

Calculate the variable selling/administrative cost per marine pump.

$Variable selling/administrativecost per marine pump}=(Total selling\administrative cost−Fixed portion)Production capacity=$500,000−$60,00025,000 units=$17.60 per unit$

Note: Total variable overhead cost is $500,000 $(25,000 pumps×$20 per unit)$

4.

To determine

State the strategic factors that are related to company M’s decisions.

4.

Expert Solution

Explanation of Solution

State the strategic factors that are related to company M’s decisions as follows:

New market and customer benefits for other product line.
Critical success factors related pumps and fans.
Market research of pump sales.
Positive and negative image for pump sales.

Answer 6

Chapter 11, Problem 36P

1.

To determine

Calculate the relevant manufacturing cost per fan.

1.

Expert Solution

Explanation of Solution

Calculate the relevant manufacturing cost per fan as follows:

Particulars	Amount ($)
Electric motor	$6.00
Other parts	$8.00
Direct labor	$15.00
Variable manufacturing overhead (1)	$5.00
Relevant manufacturing cost per unit	$ 34.00

Table (1)

Working note (1):

Calculate the variable manufacturing overhead cost per unit.

$Variable manufacturing overhead cost per unit}=(Total overhead cost per unit−(Total fixed costProduction fans))=($15 per unit−$100,00010,000 units)=$15 per unit−$10 per unit=$5 per unit$

Answer 7

Chapter 11, Problem 36P

1.

To determine

Calculate the relevant manufacturing cost per fan.

Answer 8

1.

Expert Solution

Explanation of Solution

Calculate the relevant manufacturing cost per fan as follows:

Particulars	Amount ($)
Electric motor	$6.00
Other parts	$8.00
Direct labor	$15.00
Variable manufacturing overhead (1)	$5.00
Relevant manufacturing cost per unit	$ 34.00

Table (1)

Working note (1):

Calculate the variable manufacturing overhead cost per unit.

$Variable manufacturing overhead cost per unit}=(Total overhead cost per unit−(Total fixed costProduction fans))=($15 per unit−$100,00010,000 units)=$15 per unit−$10 per unit=$5 per unit$

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

2.

To determine

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan.

2.

Expert Solution

Explanation of Solution

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan as follows:

Particulars	Units
Fans produced internally (current capacity)	15,000
Less: Fans purchased from external supplier $(20,000−15,000)$	5,000
Total sales volume (units)	20,000

Table (1)

Total contribution margin under optimum plan.

$Total contribution margin} =[(Current capacity×Contribution margin per unit (2) )+(Fans purchased from external supplier×Contribution margin per unit )]=[(15,000 unit ×$24)+(5,000 units×$12)]=$360,000+60,000=$420,000$

Working note (2):

Calculate contribution margin per unit for current capacity (15,000 units).

$Contribution margin per unit}=(Selling price per unit−Relevant cost per unit−Variable cost per unit)=$72−$34−$12=$24$

Answer 13

2.

To determine

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan.

Answer 14

2.

Expert Solution

Explanation of Solution

Calculate the number of units that company should manufacture and purchase and calculate the contribution margin under optimum plan as follows:

Particulars	Units
Fans produced internally (current capacity)	15,000
Less: Fans purchased from external supplier $(20,000−15,000)$	5,000
Total sales volume (units)	20,000

Table (1)

Total contribution margin under optimum plan.

$Total contribution margin} =[(Current capacity×Contribution margin per unit (2) )+(Fans purchased from external supplier×Contribution margin per unit )]=[(15,000 unit ×$24)+(5,000 units×$12)]=$360,000+60,000=$420,000$

Working note (2):

Calculate contribution margin per unit for current capacity (15,000 units).

$Contribution margin per unit}=(Selling price per unit−Relevant cost per unit−Variable cost per unit)=$72−$34−$12=$24$

Answer 15

2.

Expert Solution

Answer 16

2.

Expert Solution

Answer 17

Expert Solution

Answer 18

3.

To determine

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not.

3.

Expert Solution

Explanation of Solution

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not as follows:

Particulars	Amount ($)
Selling price per unit	$ 60.00
Less: Variable cost per unit
Electric motor	$ 5.50
Other parts	$ 7.00
Direct labor @$15 per unit	$ 7.50
Manufacturing overhead (3)	$ 5.00
Selling and administrative costs (4)	$ 17.60
Contribution margin per unit	$ 17.40

Table (1)

$Contribution margin = (Normal production×Contribution margin per unit)=25,000 units×$17.40 per unit=$435,000$

In this case, total contribution margin from making pumps is more than the total contribution margin for making fans. Hence, company should produce the pumps.

Working note (3):

Calculate the variable overhead cost per marine pump.

$Variable overheadcost per marine pump}=(Total overheade cost−Fixed overhead)Production capacity=$225,000−$100,00025,000 units=$5 per unit$

Note: Total variable overhead cost is $225,000 $(25,000 pumps×$9 per unit)$

Working note (4):

Calculate the variable selling/administrative cost per marine pump.

$Variable selling/administrativecost per marine pump}=(Total selling\administrative cost−Fixed portion)Production capacity=$500,000−$60,00025,000 units=$17.60 per unit$

Note: Total variable overhead cost is $500,000 $(25,000 pumps×$20 per unit)$

Answer 19

3.

To determine

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not.

Answer 20

3.

Expert Solution

Explanation of Solution

Calculate the total contribution margin from manufacturing and selling the marine pumps and state whether company should manufacture the pumps or not as follows:

Particulars	Amount ($)
Selling price per unit	$ 60.00
Less: Variable cost per unit
Electric motor	$ 5.50
Other parts	$ 7.00
Direct labor @$15 per unit	$ 7.50
Manufacturing overhead (3)	$ 5.00
Selling and administrative costs (4)	$ 17.60
Contribution margin per unit	$ 17.40

Table (1)

$Contribution margin = (Normal production×Contribution margin per unit)=25,000 units×$17.40 per unit=$435,000$

In this case, total contribution margin from making pumps is more than the total contribution margin for making fans. Hence, company should produce the pumps.

Working note (3):

Calculate the variable overhead cost per marine pump.

$Variable overheadcost per marine pump}=(Total overheade cost−Fixed overhead)Production capacity=$225,000−$100,00025,000 units=$5 per unit$

Note: Total variable overhead cost is $225,000 $(25,000 pumps×$9 per unit)$

Working note (4):

Calculate the variable selling/administrative cost per marine pump.

$Variable selling/administrativecost per marine pump}=(Total selling\administrative cost−Fixed portion)Production capacity=$500,000−$60,00025,000 units=$17.60 per unit$