FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- 49. The Camel Company produces 12,000 units of item Roto 454 annually at a total cost of $270,000. Direct materials 40,000 Direct labor 75,000 Variable overhead 65,000 Fixed overhead 90,000 Total $ 270,000 The Yukon Company has offered to supply 12,000 units of Roto 454 per year for $20 per unit. If Camel accepts the offer, $4 per unit of the fixed overhead would be saved. In addition, some of Camel's facilities could be rented to a third party for $17,000 per year. What are the relevant costs for the "make" alternative? %24 %24arrow_forwardA machine with an eight-year life and $5000 salvage is purchased for $40,000. Annual costs of operation are $800. The machine operator is paid $12.90 per hour. Power is consumed by the machine at the rate of $2.15 per hour, 2000 units are produced each year on the machine, which requires 48 minutes per unit. Use a 10% interest rate to find the unit cost.arrow_forwardAt the start of the year, Vencor Company estimated manufacturing overhead to be $2,000,000. Eighty percent of the overhead is fixed and relates to depreciation of equipment. The remaining 20 percent is variable. The company estimated machine hours to be 100,000 and thus used a predetermined overhead rate of $20 per machine hour. During the year, the company devised a new way to sequence movements of material among the machines, which resulted in a savings of 30,000 machine hours. Estimate the amount of manufacturing overhead that the company would save related to the reduction in machine hours. Why is the savings less than $20 per machine hour?arrow_forward
- Calculate the hourly operating cost (under average conditions) for a 180- horsepower motor grader which costs $230,000 and is used in general contracting for 1500 hours per year for 10 years. The per gallon price of diesel fuel is $2.90. Salvage value is estimated to be $85,000 and a set of tires costs $5,000 for 2000 hours of average useful life. Assume a repair factor of 40% based on 10,000 hours of useful life as a percentage of hourly straight-line depreciation. (Use discount rate of 8%).arrow_forward8. A lathe machine costing 53,000 has a scrap value of 5,000 at the end of useful life. Thismachine has a working hour average life of 50,000 hours and will be run as follows:1st year 5,675 hours2nd year 7,300 hours3rd year 6,600 hours4th year 9,775 hours5th year 8,260 hours6th year 2,785 hoursFind the 3rd, 5th and 6th year depreciation charge respectively. (Units of production method)arrow_forwardFinch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May June Manufacturing costs* $160,000 $199,000 $206,600 Insurance expense** 1,050 1,050 1,050 Depreciation expense 2,160 2,160 2,160 Property tax expense*** 540 540 540 *Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month.**Insurance expense is $1,050 a month; however, the insurance is paid four times yearly in the first month of the quarter, (i.e., January, April, July, and October).***Property tax is paid once a year in November. The cash payments expected for Finch Company in the month of May are a.$189,250 b.$229,250 c.$40,000 d.$149,250arrow_forward
- want the answer of this questionarrow_forwardQuick Producers acquired factory equipment on March 1 of Year 1 costing $39,000 . In view of pending technological developments, it is estimated that the equipment will have an $8,000 resale value upon disposal in four years and that disposal costs will be $500. Data relating to the equipment follow. Estimated Service Life Years 4 Service hours 20,000 Calendar Year Actual Service Hours Year 1 4,700 Year 2 5,000 Year 3 4,800 Year 4 4,400 Year 5 1,000 Required Compute depreciation expense each year for the life of the asset assuming (1) units-of-production, (2) straight-line, (3) sum-of-the-years’-digits, and (4) double-declining-balance depreciation.●Note: Round depreciation expense to the nearest whole dollar 1. Units-of-Production●Note: Do not use negative signs with any of your answers. Numerator Denominator Result Depreciation per Unit Answer ÷ Answer = ●Note: Use the result EXACTLY as displayed above in the calculations…arrow_forwardFinch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May June Manufacturing costs* $156,300 $192,700 $213,400 Insurance expense*: 970 970 970 Depreciation expense 1,820 1,820 1,820 Property tax expense*** 540 540 540 Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month. **Insurance expense is $970 a month; however, the insurance is paid four times yearly in the first month of the quarter, (i.e., January, April, July, and October). ***Property tax is paid once a year in November. The cash payments expected for Finch Company in the month of April are a. $120,135 b. $117,225 c. $138,218 d. $156,300arrow_forward
- Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May June $155,600 $192,800 $213,600 Manufacturing costs* Insurance expense** 880 Depreciation expense 2,180 Property tax expense*** 590 *Of the manufacturing costs, three-fourths is paid for in the month they are incurred; one-fourth is paid in the following month. **Insurance expense is $880 a month; however, the insurance is paid four times yearly in the first month of the quarter (i.e., January, April, July, and October). ***Property tax is paid once a year in November. 880 2,180 590 880 2,180 590 The cash payments expected for Finch Company in the month of May are O a. $183,500 O b. $144,600 Oc. $38,900 O d. $222,400arrow_forwardSpecialized bits (costing $50,000) used in the mining industry have a useful life of 5000 hours of operation and can be traded in when a new bit is purchased for 10% of first cost. The drilling machine that uses the bit is used 1000 hours per year. What is the equivalent uniform annual cost of these bits at 2.5%? (a) $8559 (b) $9510 (c) $9828 (d) $10,920arrow_forwardA local manufacturing company estimated the following expenses for the upcoming year: a. Insurance on factory: $100,000 b. Factory security: 1 guard at $20/hour for a 2,000 hour work year . 1 production supervisor at $90,000/year d. Repair/Maintenance Technicians: 2 technicians at $40/hour each for a 2,000 hour work year e. Depreciation: $25/machine hour f. Utilities: $7/machine hour The company applies overhead on the basis of machine hours. Required: Build the cost formula Assume one unit of output takes 2 machine hours, and the estimated production for the year is 20,000 units • Calculate the expected number of machine hours to be used in the year. o Calculate the estimated total manufacturing overhead cost. o Calculate the applied overhead rate per machine hour. o Calculate the applied overhead per unit of output.arrow_forward
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