Munoz Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $77,050 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,690 tents in January and 1,300 tents in February. For the entire year, the company expects to produce 11,500 tents. If the cost objective is to determine the cost per tent, is the expert’s salary a direct or an indirect cost? How much of the expert’s salary should be allocated to tents produced in January and February?
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Munoz Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $77,050 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,690 tents in January and 1,300 tents in February. For the entire year, the company expects to produce 11,500 tents.
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If the cost objective is to determine the cost per tent, is the expert’s salary a direct or an indirect cost?
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How much of the expert’s salary should be allocated to tents produced in January and February?
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- Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?Otero Fibers, Inc., specializes in the manufacture of synthetic fibers that the company uses in many products such as blankets, coats, and uniforms for police and firefighters. Otero has been in business since 1985 and has been profitable every year since 1993. The company uses a standard cost system and applies overhead on the basis of direct labor hours. Otero has recently received a request to bid on the manufacture of 800,000 blankets scheduled for delivery to several military bases. The bid must be stated at full cost per unit plus a return on full cost of no more than 10 percent after income taxes. Full cost has been defined as including all variable costs of manufacturing the product, a reasonable amount of fixed overhead, and reasonable incremental administrative costs associated with the manufacture and sale of the product. The contractor has indicated that bids in excess of 30 per blanket are not likely to be considered. In order to prepare the bid for the 800,000 blankets, Andrea Lightner, cost accountant, has gathered the following information about the costs associated with the production of the blankets. Direct machine costs consist of items such as special lubricants, replacement of needles used in stitching, and maintenance costs. These costs are not included in the normal overhead rates. Otero recently developed a new blanket fiber at a cost of 750,000. In an effort to recover this cost, Otero has instituted a policy of adding a 0.50 fee to the cost of each blanket using the new fiber. To date, the company has recovered 125,000. Lightner knows that this fee does not fit within the definition of full cost, as it is not a cost of manufacturing the product. Required: 1. Calculate the minimum price per blanket that Otero Fibers could bid without reducing the companys operating income. 2. Using the full-cost criteria and the maximum allowable return specified, calculate Otero Fibers bid price per blanket. 3. Without prejudice to your answer to Requirement 2, assume that the price per blanket that Otero Fibers calculated using the cost-plus criteria specified is greater than the maximum bid of 30 per blanket allowed. Discuss the factors that Otero Fibers should consider before deciding whether or not to submit a bid at the maximum acceptable price of 30 per blanket. (CMA adapted)Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,000 for the Sleepeze, 12,000 for the Plushette, and 5,000 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: a. Salaries for his office (including himself at 65,000, a marketing research assistant at 40,000, and an administrative assistant at 25,000) are budgeted for 130,000 next year. b. Depreciation on the offices and equipment is 20,000 per year. c. Office supplies and other expenses total 21,000 per year. d. Advertising has been steady at 20,000 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign. e. Commissions on the Sleepeze and Plushette lines are 5 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores. f. Last year, shipping for the Sleepeze and Plushette lines averaged 50 per unit sold. Gene expects the Ultima line to ship for 75 per unit sold since this model features a larger mattress. Required: 1. Suppose that Gene is considering three sales scenarios as follows: Prepare a revenue budget for the Sales Division for the coming year for each scenario. 2. Prepare a flexible expense budget for the Sales Division for the three scenarios above.
- Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?Zachary manufacturing company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $121600 per year to inspect completed tents before they are shipped to customers. assume that the company completed 1,530 tents in January and 1,240 tents in February. For the entire year, the company expects to produce 19000 tents. required c) If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? D) How much of the expert's salary should be allocated to tents produced in January and February? If the cost objective is to determine the cost per tent is the expert's salary a direct or an indirect cost?Philbrick Company signed a three-year contract to develop custom sales training materials and provide training to the employees of Elliot Company. The contract price is $1,200 per employee and the number of employees to be trained is 400. Philbrick can send a bill to Elliot at the end of every training session. Once developed, the custom training materials will belong to Elliot Company, but Philbrick does not consider them to be a separate performance obligation.The expected number to be trained in each year and the expected development and training costs follow. Number ofemployees Developmentand trainingcosts incurred 2019 125 $ 65,000 2020 200 80,000 2021 75 30,000 Total 400 $175,000 For each year, compute the revenue, expense, and gross profit reported assuming revenue is recognized over time using...1. the number of employees trained as a measure of the value provided to the customer.Note: Round answers to the nearest dollar. Year 2019 2020 2021 Total…
- Gibson Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $83,200 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,540 tents in January and 1,130 tents in February. For the entire year, the company expects to produce 13,000 tents. Required a. As the number of tents inspected increases, does the amount of fixed cost increase, decrease, or stay the same? b. As the number of tents inspected increases, does the fixed cost per unit increase, decrease, or stay the same? c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? d. How much of the expert's salary should be allocated to tents produced in January and February? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D How much of the expert's salary…Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0 to 1,800 units, and monthly production costs for the production of 1,400 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($110 fixed) Supervisor's salary Maintenance ($350 fixed) Depreciation Total Cost $ 2,100 6,700 570 2,600 470 750 Suppose it sells each birdbath for $24. Required: 1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. 2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,600 units. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. Note: Round your intermediate…Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0 to 1,800 units, and monthly production costs for the production of 1,400 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($150 fixed) Supervisor's salary Maintenance ($330 fixed) Depreciation Suppose it sells each birdbath for $22. Required: 1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. 2. Complete the contribution margin Income statement assuming that Morning Dove produces and sells 1,600 units. 4 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. Note: Round your intermediate calculations and final answer to 2 decimal places.…
- Zippy Inc. manufactures a fuel additive, Surge, which has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your examination of Zippy's financial statements for the year ended September 30, management has asked you to review some computations made by Zippy's cost accountant. Your working papers disclose the following about the company's operations: Standard costs per drum of product manufactured: Materials: 8 gallons of chemicals @ $2. $16 1 empty drum. $17 Direct labor-1 hour. $10 Factory Overhead. $ 6 Costs and expenses during September: Chemicals: 645,000 gallons purchased at a cost of $1,140,000; 600,000 gallons used. Empty drums: 94,000 purchased at a cost of $94,000; 80,000 drums used. Direct labor: 81,000 hours worked at a cost of $816,480. Factory overhead: $768,000. REQUIRED: Calculate the following for September, using the formulas in Determination of Variances on pages 421–422 and 424 (Round unit…Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0 to 1,800 units, and monthly production costs for the production of 1,400 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($110 fixed) Supervisor's salary Maintenance ($350 fixed) Depreciation Required: 1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof). 2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. 3. State Morning Dove's linear cost equation for a production level of 0 to1,800 units. Enter answer as an equation in the form of y= a + bx. 4. Calculate Morning Dove's expected total cost if production increased to 1,600 units per month. Enter answer as an equation in the form of y= a…PERBANAS, Inc. installs heating systems in new homes built in the southern tier counties of New York state. Jobs are priced using the time and materials method. The president of PERBANAS, Fenturini, is pricing a job involving the heating systems for six houses to be built by a local developer. He has made the following estimates. Material cost $ 30,000 Labor hours 200 The following predictions pertain to the company’s operations for the next year. Labor rate, including fringe benefits $ 8.00 per hour Annual labor hours 6,000 hours Annual overhead costs: Material handling and storage $ 12,500 Other overhead costs $ 54,000 Annual cost of materials used $ 125,000 Perbanas adds a markup of $ 2 per hour on its time charges, but there is no markup on material costs. Required: 1. Calculate the company's time charges and the material charges percentage. 2. Compute the price for the job 3. What would be the price of the job if Perbanas also added a markup of 5 % on all material charges…
