Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 2, Problem 2.32E
Total and unit cost, decision making. Gayle’s Glassworks makes glass flanges for scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $28 per hour. A glass blower blows 10 flanges per hour. Fixed
- 1. Graph the fixed, variable, and total manufacturing cost for flanges, using units (number of flanges) on the x-axis.
Required
- 2. Assume Gayle’s Glassworks manufactures and sells 5,000 flanges this period. Its competitor, Flora’s Flasks, sells flanges for $10 each. Can Gayle sell below Flora’s price and still make a profit on the flanges?
- 3. How would your answer to requirement 2 differ if Gayle’s Glassworks made and sold 10,000 flanges this period? Why? What does this indicate about the use of unit cost in decision making?
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HASF Glassworks makes glass flanges for scientific use Material cost $ 1 per flange and the glass blowers are paid a wage rate of 20 per hours a glass blower blows 10 flanges per hours. Fixed manufacturing costs for flanges are 20,000 per period. other nonmanufacturing cost associated with flanges are 10,000 per period and are fixed.
1-Find out total fixed cost2-Find out Variable cost per unit
Charge Company manufactures a part for its production cycle. The annual
costs per unit for 5,000 units of the part are given below. The fixed factory
overhead costs are unavoidable. Another company has offered to sell 5,000
units of the same part to Charge Company for $15 per unit. The facilities
currently used to make the part could be rented out to another
manufacturer for $20,000 a year. Charge Company should
Per Unit
Direct materials
$3.00
Direct labor
5.00
Variable factory overhead
Fixed factory overhead
Total costs
4.00
2.00
$14.00
buy the part and rent facilities to save $5,000 )
make the part to save $15,000 O
buy the part and rent facilities to save $15,000
make the part to save $5,000 O
make the part to save $10,000 O
Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:
DirectLabor-Hoursper unit
AnnualProduction
Rims
0.40
18,000 units
Posts
0.70
77,000 units
Additional information about the company follows:
Rims require $14 in direct materials per unit, and Posts require $11.
The direct labor wage rate is $15 per hour.
Rims are more complex to manufacture than Posts and they require special equipment.
The ABC system has the following activity cost pools:
Estimated Activity
Activity Cost Pool
Activity Measure
EstimatedOverheadCost
Rims
Posts
Total
Machine setups
Number of setups
$
30,030
120
80
200
Special processing
Machine-hours
$
147,840
2,000
0
2,000
General factory
Direct labor-hours
$
576,000
7,000
29,000
36,000
2. Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
Chapter 2 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 2 - Define cost object and give three examples.Ch. 2 - Define direct costs and indirect costs.Ch. 2 - Prob. 2.3QCh. 2 - Name three factors that will affect the...Ch. 2 - Define variable cost and fixed cost. Give an...Ch. 2 - What is a cost driver? Give one example.Ch. 2 - What is the relevant range? What role does the...Ch. 2 - Explain why unit costs must often be interpreted...Ch. 2 - Prob. 2.9QCh. 2 - What are three different types of inventory that...
Ch. 2 - Distinguish between inventoriable costs and period...Ch. 2 - Define the following: direct material costs,...Ch. 2 - Describe the overtime-premium and idle-time...Ch. 2 - Define product cost. Describe three different...Ch. 2 - What are three common features of cost accounting...Ch. 2 - Prob. 2.16MCQCh. 2 - Comprehensive Care Nursing Home is required by...Ch. 2 - Frisco Corporation is analyzing its fixed and...Ch. 2 - Year 1 financial data for the ABC Company is as...Ch. 2 - The following information was extracted from the...Ch. 2 - Computing and interpreting manufacturing unit...Ch. 2 - Direct, indirect, fixed, and variable costs....Ch. 2 - Classification of costs, service sector. Market...Ch. 2 - Classification of costs, merchandising sector....Ch. 2 - Classification of costs, manufacturing sector. The...Ch. 2 - Variable costs, fixed costs, total costs. Bridget...Ch. 2 - Variable and Fixed Costs. Consolidated Motors...Ch. 2 - Variable costs, fixed costs, relevant range. Gummy...Ch. 2 - Prob. 2.29ECh. 2 - Cost drivers and functions. The representative...Ch. 2 - Total costs and unit costs, service setting....Ch. 2 - Total and unit cost, decision making. Gayles...Ch. 2 - Inventoriable costs versus period costs. Each of...Ch. 2 - Computing cost of goods purchased and cost of...Ch. 2 - Cost of goods purchased, cost of goods sold, and...Ch. 2 - Flow of Inventoriable Costs. Renkas Heaters...Ch. 2 - Cost of goods manufactured, income statement,...Ch. 2 - Cost of goods manufactured, income statement,...Ch. 2 - Income statement and schedule of cost of goods...Ch. 2 - Interpretation of statements (continuation of...Ch. 2 - Income statement and schedule of cost of goods...Ch. 2 - Terminology, interpretation of statements...Ch. 2 - Labor cost, overtime, and idle time. David...Ch. 2 - Missing records, computing inventory costs. Ron...Ch. 2 - Comprehensive problem on unit costs, product...Ch. 2 - Prob. 2.46PCh. 2 - Cost classification; ethics. Paul Howard, the new...Ch. 2 - Prob. 2.48P
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