After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility, Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability. He plans to produce 109,000 units of the Sport model and 44,500 units of the Pro model in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by 34 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Activity Assembly building Assembling Setting up machines Handling material Packaging building Inspecting and packing Shipping Direct material Direct labor Assembly Packaging Cost Driver Machine-hours Setup hours Production runs Total direct labor Direct labor-hours Number of shipments Cost Driver Volume Pro Direct costs Overhead Assembly building Assembling (@ $30 per MH) Setting up machine (3 $900 per setup hour) wwwda 76 44 ARA Sport 6,900 49 17 63, 600 109 30, 900 490 49 Third Quarter Unit Cost Report. Activity-Based Costing-CenterPoint Manufacturing Facility Sport $1,509,000 24,600 218 $ 759,000 999,000 $1,758, 000 $3, 267,000 Total 37,800 539 66 $207,000 44,180 PA Ann 88, 200 327 Pro $2,418,000 $ 618,000 378,000 $ 996,000 $3,414, 000 $ 927,000 441,000 Ann

Barbara, the manager of Metlock, is analyzing the company's MOH costs from last year. Metlock had always followed an actual costing system when determining the costs of its customizable telescopes. Barbara wondered if it would be better to switch to a normal costing system, as she had heard a number of people talking about that at an industry conference she attended the previous month. Since Metlock has a highly machine-intensive operation, machine hours are used as its MOH cost driver. Here are the costs and other MOH information Barbara is analyzing: Budgeted MOH cost Actual MOH cost Budgeted machine hours Actual machine hours $426,240 Actual MOH rate $ 419,040 Determine the actual MOH rate and the budgeted MOH rate Metlock would have used last year under actual costing and normal costing, respectively. (Round answers to 2 decimal places, e.g. 52.75.) Budgeted MOH rate $ 96,000 108,000 /machine hour /machine hour

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $17,000+ $0.12 per machine-hour $38,300+ $1.70 per machine-hour $0.50 per machine-hour During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March.…

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor. Depreciation Cost Formula $16,900 $0.14 per machine-hour $38, 300+ $1.30 per machine-hour $0.70 per machine-hour $94,700+ $1.50 per machine-hour $68, 100 Actual Cost in March $ 21,360 $ 56,800 $ 13, 100 $ 124, 100 $ 69,808 During March, the company worked 17,000 machine-hours and produced 11,000 units. The company had originally planned to work 19,000 machine-hours during…

The Write Way manufactures double sided pens- a pen on one side, a highlighteron the other. As the accounting manager, Shade is responsible for presenting three different versions of the company's income statement to the rest of the management team at year-end. Team members are very familiar with absorbtion costing, as they have been evaluating gross margin amounts and percentages for years. They are lesss keen on how fixed-MOH impacts the income statment, so Shade gathers the following current information. The information includes three possible capacity levels for calculating the fixed-MOH rate. Shade also notes there are no price or efficiency variances this period. Any fixed-MOH volume variase is written off to COGS.Theoretical level - 80,000 units Practical level - 60,000 units Normal level - 50,000 units Actual production - 65,000 units Sales Volume - 60,000 units Budgeted fixed-MOH cost - $240,000 Budgeted DM cost -  $2.25 per unit Budgeted DL cost -$1.30 per unit Budgeted…

Vijay

Danna Lumus, the marketing manager for a division that produces a variety of paper products, was considering the divisional manager’s request for a sales forecast for a new line of paper napkins. The divisional manager was gathering data so that he could choose between two different production processes. The first process would have a variable cost of $10 per case produced and fixed costs of $100,000. The second process would have a variable cost of $6 per case and fixed costs of $200,000.The selling price would be $30 per case. Danna had just completed a marketing analysis that projected annual sales of 30,000 cases. Danna was reluctant to report the 30,000 cases forecast to the divisional manager. She knew that the first process was labor-intensive, whereas the second was largely automated with little labor and no requirement for an additional production supervisor. If the first process were chosen, Jerry Johnson, a good friend, would be appointed as the line supervisor. If the…

Lay's Potato Chips is examining their Wavy Lays chip line. They began the year expecting to produce 500,000 bags of potato chips. They projected that each bag would require 3 pounds of potatos and 1.5 hours of labor to manufacture. They planned to pay $2 per pound for potatos and $20 per hour for labor. They also budgeted $900,000 for variable manufacturing overhead costs and $ 450,000 of fixed manufacturing overhead costs, with both variable and fixed manufacturing overhead costs being allocated based on direct labor hours. At the end of the year, Lay's finds that they produced 880,000 bags of potato chips, using 3.25 pounds of potatos per bag and 1.25 hours of labor per bag. Due to significant inflation, the purchasing department made a deal with the supplier and purchased 3,000,000 pounds of potatos for a per-pound price of $3.25. They also spent $22 per hour for direct labor. The Wavy Lays chip line spent $843,000 on variable manufacturing overhead costs and $562,000 on fixed…

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,800 +$0.16 per machine-hour $38,600 + $1.30 per machine-hour $0.70 per machine-hour $94,700 + $1.30 per machine-hour $67,800 $ 22,440 $ 63,600 $ 16,600 $ 126,800 $ 69,500 During March, the company worked 22,000 machine-hours and produced 16,000 units. The company had originally planned to work 24.000 machine-hours during March.…