Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 18, Problem 3MAD
Labor classification trade-off
Skidmore Electronics manufactures consumer electronic products. The company has three assembly labor classifications, S-1, S-2, and S-3. The three classifications are paid $15, $18, and $22 per hour, respectively. The assembly activity for a new smartphone is as follows:
A product engineer proposes using a higher-rated employee to perform the assembly on the new phone. His analysis has shown that an S-3 employee can perform the assembly in 0.35 hour per unit.
- A. Determine the Assembly activity cost using the S-3 labor classification.
- B. Is the product engineer’s proposal supported?
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Make-or-Buy, Traditional and ABC Analysis
Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for $67 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows:
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Angle Max Industries produces a product which goes through two operations, Assembly and Finishing,
before it is ready to be shipped. Next year's expected costs and activities are shown below.
Direct labor hours
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Multiple Choice
Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours.
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O$17.60.
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380,000 MH
$380,000
$20.40.
Finishing
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Chapter 18 Solutions
Financial And Managerial Accounting
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