Marwick Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 10,500 machine hours, and no other products that the company makes use these machines. Sarah Jacob, the company’s operations manager, is preparing the production schedule for the coming month and can’t seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget. Michael Stoner, the company’s controller, has gathered the following information about the two products:

Asbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial. The Personal grinders have a smaller capacity and are less durable than the Commercial grinders. ACE only recently began producing the Commercial model. Since the introduction of the new product, profits have been steadily declining, although sales have been increasing. The management at ACE believes that the problem might be in how the accounting system allocates costs to products. The current system at ACE allocates manufacturing overhead to products based on direct labor costs. For the most recent year, which is representative, manufacturing overhead totaled $2,145,000 based on production of 30,000 Personal grinders and 10,000 Commercial grinders. Direct costs were as follows: Direct materials Direct labor Personal $ 1,451,400 1,038,000 Commercial $ 702,000 749,500 Total $ 2,153,400 1,787,500 Management has determined that overhead costs are caused by three cost drivers. These…

Carla Vista Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 10,500 machine hours, and no other products that the company makes use these machines. Sarah Jacob, the company's operations manager, is preparing the production schedule for the coming month and can't seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget. Michael Stoner, the company's controller, has gathered the following information about the two products: Dumbbell Weight Rack Bench Selling price per unit $44 $60 Direct materials 19 16 Direct labor 4 8 Variable overhead 3 6 Fixed overhead 5 10 Profit per unit $13 $20 Unit sales demand 5,000 8,000 Machine hours per unit 0.75 1.5 LO

Spaine Manufacturing produces surfboards. The company uses a normal-costing system and allocates manufacturing overhead on the basis of direct manufacturing labor-hours. Most of the company's production and sales occur in the first and second quarters of the year. The company is in danger of losing one of its larger customers, Sofo Wholesale, due to large fluctuations in price. The owner of Spaine has requested an analysis of the manufacturing cost per unit in the second and third quarters. You have been provided the following budgeted information for the coming year: (Click the icon to view the budgeted information.) (Click the icon to view additional information.) Read the requirements. Requirement 1 and 2. Calculate the total manufacturing cost per unit for the second and third quarter assuming the company allocates manufacturing overhead costs based on the budgeted manufacturing overhead rate determined for each quarter and an annual budgeted manufacturing overhead rate. First…

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company’s products is a heavy-duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2,000 hours of welding time is available annually on the machine. Because each drum requires 0.4 hours of welding machine time, annual production is limited to 5,000 drums. At present, the welding machine is used exclusively to make the WVD drums. The accounting department has provided the following financial data concerning the WVD drums:   WVD Drums Selling price per drum     $ 149.00 Cost per drum:         Direct materials $52.10       Direct labor ($18 per hour) 3.60       Manufacturing overhead 4.50       Selling and administrative expense 29.80     90.00 Margin per drum     $ 59.00     Management…

Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $55,000 per year, to solve the problem. With this extra worker, the company could produce and sell 2,900 more units per year. Currently, the selling price per unit is $26.00 and the cost per unit is $7.60. Direct materials $3.40 Direct labor 1.10 Variable overhead 0.40 Fixed overhead (primarily depreciation of equipment) 2.70 Total $7.60   Using the information provided, calculate the annual financial impact of hiring the extra worker. What is the profit?

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the chemical industry. One of the company’s products is a heavy-duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2,000 hours of welding time is available annually on the machine. Because each drum requires 0.4 hours of welding machine time, annual production is limited to 5,000 drums. At present, the welding machine is used exclusively to make the WVD drums. The accounting department has provided the following financial data concerning the WVD drums:   WVD Drums Selling price per drum     $ 149.00 Cost per drum:         Direct materials $52.10       Direct labor ($18 per hour) 3.60       Manufacturing overhead 4.50       Selling and administrative expense 29.80     90.00 Margin per drum     $ 59.00     Management…

the company’s products is a heavy-duty corrosion-resistant metal drum, called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an automated welding machine that is used to make precision welds. A total of 2,160 hours of welding time is available annually on the machine. Because each drum requires 0.4 hours of welding machine time, annual production is limited to 5,400 drums. At present, the welding machine is used exclusively to make the WVD drums. WVD Drums Selling price per drum     $ 181.00 Cost per drum:         Direct materials $52.10       Direct labor ($26 per hour) 5.20       Manufacturing overhead 9.30       Selling and administrative expense 31.40     98.00 Margin per drum     $ 83.00   Management believes 6,700 WVD drums could be sold each year if the company had sufficient manufacturing capacity. As an alternative to adding another welding machine, management has considered buying additional drums from an outside…

Edin-Chem Ltd. is a small company that acquires high-grade crude oil from low volume producing wells owned by individuals. The crude oil is processed in a single refinery into Two Oil, Six Oil, and impure distillates. Edin-Chem does not have the technology or capacity to process these products further and sells most of its putput each month to major refineries. There were no beginning finished goods or work-in-process inventories on January 1. The production costs and output of Edin-Chem for January are as follows: 1. Crude oil acquired and placed into production £5,000,000 Direct labour and related costs 2,000,000 Manufacturing overhead 3,000,000 2. Production and sales: Two Oil: Six Oil: Required: 300,000 barrels produced; 80,000 barrels sold at £20 each 240,000 barrels produced; 120,000 barrels sold at £30 each Distillates: 120,000 barrels produced and sold at £15 per barrel Calculate the amount of joint production cost that Edin-Chem would allocate to each of the three joint…

Fit-For-A-King Inc. manufactures foam products for several upholstery companies. This company has two workstations, mixing/heating and cutting/assembly. The mixing/heating station is limited by the capacity of the equipment. Cutting/assembly is limited by the speed of the cutting machine workers. Cutting/assembly normally lags behind mixing/heating. Because the demand has increased in recent months, management is considering adding another person to cutting/assembly. This would increase the department's costs by $4,000 a month. If the person is moved from mixing/heating, that department's cost would decline by $3,000. By keeping mixing/heating laborer’s the same, the department can increase production on-call by 10 percent. Current idle time in mixing/heating averages one-half person a day for a net cost of $1,400 a month. Required What is the net effect of moving the employee from mixing/heating to cutting/assembly? What is the net effect if a new employee is hired for…