Way cool produces two different models of air conditioners

Managerial Accounting 1B Ch17

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.

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

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

2.

Exercise 17-6 Part 2

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

3.

Exercise 17-7 Departmental overhead rates L.O. P2

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.

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

1.

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

2.

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.)

Product

Molding

Trimming

Total overhead
cost

Part A27C

Part X82B

3.

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

4.

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.

Model 145

Model 212

Units produced

1,500

3,500

Welding hours

800

2,200

Batches

400

400

Number of inspections

400

300

Machine hours

1,800

4,200

Setups

60

60

Rework orders

160

140

Purchase orders

300

150

Required

1.

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

2.

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

Total cost

Model 145

Model 212

3.

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.

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 per unit

Activity

Overhead costs

Machine setup

$

121,000

Materials handling

48,000

Quality control

80,000

$

249,000

Required

1.

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

2.

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

3.

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.

PowerPunch

SlimLife

Production volume

12,500

bottles

180,000

bottles

Liquid materials

1,400

gallons

37,000

gallons

Dry materials

620

pounds

12,000

pounds

Bottles

12,500

bottles

180,000

bottles

Labels

3

labels per bottle

1

label per bottle

Machine setups

500

setups

300

setups

Machine hours

200

MH

3,750

MH

Additional data from its two production departments follow.

Department

Driver

Cost

Mixing department

Liquid materials

Gallons

$

2,304

Dry materials

Pounds

6,941

Utilities

Machine hours

1,422

Bottling department

Bottles

Units

$

77,000

Labeling

Labels per bottle

6,525

Machine setup

Setups

20,000

7.

Problem 17-1A Part 2

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.)

PowerPunch

SlimLife

Average cost per bottle

9.

Problem 17-1A Part 4

4.

What is the minimum price that the company should set per bottle of SlimLife?

$0.53 per bottle

$0.86 per bottle

$0.36 per bottle

The price of SlimLife must cover the costs associated with the product, so the minimum price for this product is $0.53 / bottle.