Predicted Reduction in Activity Units Predetermined Overhead Allocation Rete per Unit Activity Inspection of incoming raw materials Inspection of finished goods Number of defective units discovered in-house Number of defective units discovered by customers Lost profits due ta dissatisfied customers 390 19 390 1,200 325 50 72 75 102

DataSpan, Incorporated, automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations. Throughput time (days) Delivery cycle time (days) Manufacturing cycle efficiency (MCE) Percentage of on-time deliveries Total sales (units) 1 2 Month ? ? ? ? ? ? 91% 86% 3,460 3,312 Move time per unit Process time per unit Wait time per order before start of production Queue time per unit Inspection time per unit 3 ? ? ? 82% 3,143 4 Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months: ? ? ? 78% 3,025…

Vishnu

Quality improvement programs and cost savings Gurland Valves Company manufactures brass valves that meet precise specification standards. All finished valves are inspected before being packaged and shipped to customers. Rejected valves are returned to the initial production stage to be melted and recast. Such rework requires no new materials in casting but requires new materials in finishing. The following unit cost data for direct materials, direct labor, and time-driven activity-based costing (ABC) are available: Casting Finishing Inspection Packing Total Costs Direct materials Direct labor Support $225 $12 $0 $8 $245 $84 $121 $24 $16 $245 $122 $164 $30 $20 $336 As a result of a quality improvement program, the reject rate has decreased from 6.4% to 5.1%, and the number of rejects has decreased by (6.4% - 5.1%) x (10,000) units. Improvements in reject rates have also led to a decrease in work-in-process inventory from $386,000 to $270,000. Inventory carrying costs are estimated to be…

Jane’s Cookhouse is a popular restaurant located in a scenic setting. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an ABC study. The intern, in consultation with the owner, identified three major activities. The intern then completed the first-stage allocations of costs to the activity cost pools, using data from last month’s operations. The results appear below:   Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners Number of parties served $ 16,585   5,350 parties Serving a diner Number of diners served $ 107,010   13,050 diners Serving a drink Number of drinks ordered $ 35,310   10,700 drinks     The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries. A group of diners who ask to sit at the same table are counted as a party. Some costs, such as the…

The president of Mission Inc. has been concerned about the growth in costs over the last several years. The president asked the controller to perform an activity analysis to gain a better insight into these costs. The activity analysis revealed the following: Activities Activity Cost Correcting invoice errors $8,500 Disposing of income materials with poor quality 16,000 Disposing of scrap 28,500 Expediting late production 21,500 Final inspection 19,000 Inspecting incoming materials 5,000 Inspecting work in process 25,000 Preventive machine maintenance 15,000 Producing product 95,500 Responding to customer quality complaints 15,000 Total 249,000   The production process is complicated by quality problems, requiring the production manager to expedite production and dispose of scrap.    Prepare a Pareto chart of the company activities.  Classify the activities into prevention, appraisal, internal failure,…

The manager of the main laboratory facility at UrbanFit Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed I that some costs remain the same each month regardless of the number of lab tests performed. The lab manager collected the following data for the first seven months of the year. (Click the icon to view the data.) Use the high-low method to determine the laboratory's cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 3,500 lab tests are performed next month. Let's begin by determining the formula that is used to calculate the variable cost (slope). Data table Variable cost (slope) Number of Lab Month Tests Performed Total Laboratory Overhead Costs January 2,800 $21,500 February 2,600 $22,700 March 3,100 $27,900 April.... 3,550 $31,400 May 3,700 $28,500 June.. 1,200 $19,500 July 1,400 $14,500 Print Done X

Directions: Answer the following questions by the due date. Use numerical calculations (if needed) to support your argument. Submit your answers through uploading a Microsoft Word file, Excel file or PDF.   Tread-Force Fitness, Inc. assembles and sells elliptical machines. All activity costs are related to labor. Management must remove $2.00 of activity cost from the product in order for it to remain competitive. Activity-based product information for each elliptical machine is as follows:                                                                                    (Hrs per unit) Activity                      Activity Based Usage       x          Activity rate / hr         =           Activity Cost Moving                                 0.20                                         $15                                        $3.00 Motor Assembly                  1.50                                          $20                                      $30.00 Final Assembly…

Woodruff Company is currently producing a snowmobile that uses five specialized parts. Engineering has proposed replacing these specialized parts with commodity parts, which will cost less and can be purchased in larger order quantities. Current activity capacity and demand (with specialized parts required) and expected activity demand (with only commodity parts required) are provided. Activities Activity Driver ActivityCapacity Current ActivityDemand Expected ActivityDemand Material usage Number of parts 200,000 200,000 200,000 Installing parts Direct labor hours 20,000 20,000 16,000 Purchasing parts Number of orders 7,600 6,498 3,990 Additionally, the following activity cost data are provided: Material usage: $11 per specialized part used; $27 per commodity part; no fixed activity cost. Installing parts: $21 per direct labor hour; no fixed activity cost. Purchasing parts: Four salaried clerks, each earning a $47,000 annual salary; each clerk is capable of processing 1,900…

Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons. The metal used in Standard is easy to work with and there are few quality issues or reworking required on the machines. The metal used in Ultra is more difficult to work with and often needs additional machine time and rework. Data on expected operations and direct costs for the next fiscal year follow: Account Administration Engineering Machine operation and maintenance Standard Miscellaneous Supervision Total 48,000 144,000 24,000 Ultral $ 3,384,000 2,520,000 Units produced Direct labor-hours used Machine-hours used Direct materials costs $5,163,000 Direct labor costs 855,000 The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year: 16,500 22,500 22,500 Total Amount $ 825,400 5,699,500 875,000 540,100 884,500 $8,824,500. 64,500 166,500…