Cost Accounting (15th Edition)
Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
Question
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Chapter 19, Problem 19.29P

1.

To determine

Acceptance of new order for 27,000 T971 valves.

2.

To determine

Whether the new design should be implemented.

Given information:

Total valves produced of V262 are 300,000 units.

Contribution per unit of V262 is $7.

Units reworked of V262 are 50,000 units.

Cost of rework per unit of V262 is $5.

New process cost for V262 is 0.

Total valves produced of T971 are 150,000 units.

Contribution per unit of T971 is $12.

Units reworked of T971 are 0 units.

Cost of rework per unit of T971 is $0.

New process cost for T971 is 538,000.

3.

To determine

Role of non-financial measures in evaluating new design.

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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.
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