Managerial Accounting 1B Ch17

Managerial Accounting 1B

Financial and Managerial Accounting

Chapter 17

Exercise 17-6 Plantwide overhead rate L.O. P1

[The following information applies to the questions displayed below.]

Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow.

DLH

	Molding		Trimming
		Direct labor hours	52,000				DLH
	48,000
				Machine hours	30, 500				MH	3,600
Overhead cost s						$	730,000	590,000

Data for two special order parts to be manufactured by the company in 2011 follow:

units

Machine hours

Direct labor hours

Molding

DLH

Trimming

DLH

Part A27C	Part X82B
Number of units	9, 800			units	54,500
	Molding		5,100	1,020
	Trimming		2,600	650

5,500	2, 150
700		3,500

1.
Exercise 17-6 Part 1

			Required
			1.	Compute the plantwide overhead rate using direct labor hours as the base. (Round your answer to 2 decimal places. Omit the “$” sign in your response.)

Plantwide overhead rate

rev: 03-04-11

Exercise 17-6 Part 2

Determine the overhead cost assigned to each product line using the plantwide rate computed in part 1.(Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.)

Product		Overhead cost
	Part A27C
	Part X82B

Exercise 17-7

Department

al overhead rates L.O. P2

Molding Trimming Direct labor hours 52,000 DLH 48,000 DLH Machine hours 30,500 MH 3,600 MH

Overhead costs

$ 730,000 $ 590,000

Data for two special order parts to be manufactured by the company in 2011 follow:

Part A27C Part X82B Number of units 9,800 units 54,500 units Machine hours Molding 5,100 MH 1,020 MH Trimming 2,600 MH 650 MH Direct labor hours

Molding 5,500 DLH 2,150 DLH Trimming 700 DLH 3,500 DLH

Required

Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

	Department	Overhead rate
Molding
Trimming

Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1. (Round your intermediate calculations to 2 decimal places and final answers to whole dollar amount. Omit the “$” sign in your response.)

Molding Trimming

Part A27C Part X82B

Product

Total overhead cost

Determine the overhead cost per unit for each product line using the departmental rate.. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

Product Overhead cost

Part A27C Part X82B

Exercise 17-9 Using the plantwide Overhead rate to assess prices L.O. A1, P1

Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.

Process		Activity	Overhead	Cost		Driver	Quantity
Components	Changeover	500,000	Number of batches		800
Machining	279,000	Machine hours	6,000
		Setups	225,000	Number of setups	120

1,004,000

Finishing

Welding

180,

300

Welding hours

3,000

Inspecting

210,000

Number of inspections

700

Rework

75,000

Rework orders

300

465,300

Support

Purchasing

135,000

Purchase orders

450

Providing space

32,000

Number of units

5,000

Providing utilities

65,000

Number of units 5,000

232,000

Additional production information concerning its two product lines follows.

produced

3,500

800

400

400 300

Machine hours

Setups

300

Model 145	Model 212
	Units	1,500
Welding hours	2, 200
Batches			400
Number of inspections
1,800	4,200
	60
Rework orders	160	140
Purchase orders	150

Required

Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “$” sign in your response.)

Product Overhead cost

		Model 145
		Model 212

Determine the total cost per unit for each products line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. (Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.)

Product

Model 145 Model 212

Total cost

Assume if the market price for Model 145 is $800 and the market price for Model 212 is $470, determine the profit or loss per unit for each model. (Input all amounts as positive values. Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.)

Model 145 Model 212

rev: 03-04-11 5.

Exercise 17-13 Using ABC for strategic decisions L.O. P1, P3

Consider the following data for two products of Rowena Manufacturing.

per unit

			Product A	Product B
Number of units produced	10,000 units	2,000 units
Direct labor cost(@$24 per DLH)	0.20 DLH per unit	0.25 DLH per unit
Direct materials cost	$ 2 per unit	$	3

Activity

48,000

Overhead costs
Machine setup	121,000
Materials handling
Quality control	80,000
249,000

Required

Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

Product A Product B

Manufacturing cost per unit

Assume if the market price for Product A is $20 and the market price for Product B is $60, determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Omit the “$” sign in your response. Input all amounts as positive values.)

	Product A
	Product B

Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B? (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

Product A Product B

Number of setups required for production	10 setups	12 setups
Number of parts required	1 part / unit	3 parts / unit
Inspection hours required	40 hours	210 hours

Product A Product B Manufacturing cost per unit

4.1	Determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)

Product A Product B

Problem 17-1A Evaluating product line costs and prices using ABC L.O. P3

[The following information applies to the questions displayed below.]

Healthy Day Company produces two beverages, PowerPunch and SlimLife. Data about these productsfollow.

bottles

gallons

pounds

12,500 bottles 180,000 bottles

300 setups

Machine hours

PowerPunch	SlimLife
Production volume		12,500			bottles	180,000
Liquid materials	1,400		gallons	37,000
Dry materials	620		pounds	12,000
Bottles
Labels	labels per bottle	1	label per bottle
Machine setups	500		setups
200	3,750

Additional data from its two production departments follow.

Department Driver Cost

Machine hours

Units $

Setups

Mixing department
Liquid materials	Gallons	2,304
Dry materials	Pounds	6,941
Utilities	1,422
Bottling department
Bottles	77,000
Labeling	Labels per bottle	6,525
Machine setup	20,000

Problem 17-1A Part 2

What is the cost per bottle for PowerPunch and SlimLife? (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the “$” sign in your response.)