Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 6, Problem 6.43P
Kaizen budgeting for carbon emissions. Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are 125,000 metric tons per quarter (or 500,000 metric tons in 2018). Apex management is investigating improved manufacturing techniques that will reduce annual carbon emissions to below 475,000 metric tons so that the company can meet Environmental Protection Agency guidelines by 2019. Costs and benefits are as follows:
| Total cost to reduce carbon emissions | $10 per metric ton reduced in 2019 below 500,000 metric tons |
| Fine in 2019 if EPA guidelines are not met | $300,000 |
Apex Management has chosen to use Kaizen budgeting to achieve its goal for carbon emissions.
- 1. If Apex reduces emissions by 1% each quarter, beginning with the second quarter of 2018, will the company reach its goal of 475,000 metric tons by the end of 2019?
- 2. What would be the net financial cost or benefit of their plan? Ignore the time value of money.
- 3. What factors other than cost might weigh into Apex’s decision to carry out this plan?
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. Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are 125,000 metric tons per quarter (or 500,000 metric tons in 2018). Apex management is investigating improved manufacturing techniques that will reduce annual carbon emissions to below 475,000 metric tons so that the company can meet Environmental Protection Agency guidelines by 2019. Costs and benefits are as follows:
Total cost to reduce carbon emissions $10 per metric ton reduced in 2019 below 500,000 metric tons
Fine in 2019 if EPA guidelines are not met $300,000
Apex Management has chosen to use Kaizen budgeting to achieve its goal for carbon emissions.
Q.What factors other than cost might weigh into Apex’s decision to carry out this plan?
Ivanhoe Remanufacturing rebuilds spot welders for manufacturers. The following budgeted cost data for 2022 are available for
Ivanhoe:
Technicians' wages and benefits
Parts manager's salary and benefits
Office employee's salary and benefits
Other overhead
Total budgeted costs
(a)
Rate charged
Time Charges
$175,000
The company wants a $30 profit margin per hour of labour and a 20% profit margin on parts. It has budgeted for 7,000 hours of repair
time in the coming year and estimates that the total invoice cost of parts and materials in 2022 will be $350,000.
Calculate the rate charged per hour of labour.
tA
35,000
14,000
$224,000
$
Material Loading Charges
per hour
$33,250
8,750
17,500
$59,500
Calculate BLZ profit for 2020 if marginal costing used
Chapter 6 Solutions
Cost Accounting (15th Edition)
Ch. 6 - What are the four elements of the budgeting cycle?Ch. 6 - Define master budget.Ch. 6 - Strategy, plans, and budgets are unrelated to ore...Ch. 6 - Budgeted performance is a better criterion than...Ch. 6 - Production managers and marketing managers are...Ch. 6 - Budgets meet the cost-benefit test. They force...Ch. 6 - Define rolling budget. Give an example.Ch. 6 - Outline the steps in preparing an operating...Ch. 6 - The sales forecast is the cornerstone for...Ch. 6 - Prob. 6.10Q
Ch. 6 - Define Kaizen budgeting.Ch. 6 - Prob. 6.12QCh. 6 - Explain how the choice of the type of...Ch. 6 - What are some additional considerations that arise...Ch. 6 - Prob. 6.15QCh. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Prob. 6.18ECh. 6 - Prob. 6.19ECh. 6 - Prob. 6.20ECh. 6 - Prob. 6.21ECh. 6 - Budgeting; direct material usage, manufacturing...Ch. 6 - Prob. 6.23ECh. 6 - Prob. 6.24ECh. 6 - Prob. 6.25ECh. 6 - Prob. 6.26ECh. 6 - Prob. 6.27ECh. 6 - Prob. 6.28ECh. 6 - Prob. 6.29ECh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31PCh. 6 - Prob. 6.32PCh. 6 - Prob. 6.33PCh. 6 - Prob. 6.34PCh. 6 - Prob. 6.35PCh. 6 - Prob. 6.36PCh. 6 - Prob. 6.37PCh. 6 - Prob. 6.38PCh. 6 - Prob. 6.39PCh. 6 - Prob. 6.40PCh. 6 - Budgeting and ethics. Jayzee Company manufactures...Ch. 6 - Prob. 6.42PCh. 6 - Kaizen budgeting for carbon emissions. Apex...
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