FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- The Park Avenue Corporation currently makes a part required in its finished product. The company uses 2,170 units of this part annually. Park Avenue Corp has been approached by a vendor to provide this part for $13.08 each. The following cost information is provided Direct Materials per unit $5.26 Direct Labor per unit $7.30 Variable Factory Overhead per unit $2.50 Fixed Factory Overhead per unit $7.50 How much would Park Avenue Corporation save by having the vendor make the part, instead of making it themselves? Enter your answer rounded to the nearest whole number. Don't enter dollar signs or commas.arrow_forwardFactor Company estimates that producing a unit of product would require $8 per unit of direct materials and $24 per unit of direct labor. Factor Company normally applies overhead using a predetermined overhead rate of 150% of direct labor cost. Factor Company estimates incremental overhead of $16 per unit of product. An outside supplier offers to provide Factor Company with all the units it needs at a price of $46 per unit. Factor Company should choose to: Multiple Choice O O O Buy since the relevant cost to make it is $56. Make since the relevant cost to make it is $48. Buy since the relevant cost to make it is $48. Make since the relevant cost to make it is $32. Buy since the relevant cost to make it is $32.arrow_forwardActon Company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 500 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.2 direct labour hours per unit. The total estimated overhead for next period is $92,023. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows: Activity Cost Pool Activity 1 Activity 2 General Factory Total Multiple Choice $86.97 $70.79 Estimated Overhead Cost $14,487 64,800 12,736 $92,023 $11.24 Product A $81.20 Expected Activity Product B (Note: The General Factory activity cost pool's…arrow_forward
- [The following information applies to the questions displayed below.] Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Based on the information provided above, provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (CSG), and (b) the net…arrow_forwardPreble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows: Direct materials: 5 kg at $10.00 per kg Direct labour: 2 hours at $15 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit The company planned to produce and sell 32,000 units in March. However, during March the company actually produced and sold 37,600 units and incurred the following costs: a. Purchased 200,000 kg of raw materials at a cost of $9.40 per kg. All of this material was used in production. b. Direct labour: 75,000 hours at a rate of $16 per hour. c. Total variable manufacturing overhead for the month was $558,750. 5. What is the labour rate variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Do not round intermediate calculations.) Labour rate variancearrow_forwardThe Park Avenue Corporation currently makes a part required in its finished product. The company uses 2,054 units of this part annually. Park Avenue Corp has been approached by a vendor to provide this part for $13.29 each. The following cost information is provided Direct Materials per unit $5.71 Direct Labor per unit $7.30 Variable Factory Overhead per unit $2.50 Fixed Factory Overhead per unit $7.50 How much would Park Avenue Corporation save by having the vendor make the part, instead of making it themselves? Enter your answer rounded to the nearest whole number. Don't enter dollar signs or commas. ch ASUS F3 f5 E3 f6 [X f7 f8 f10 f12 & 3 4 7. 8. T. Y U D F G JK L %24arrow_forward
- Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 8 pounds at $10.00 per pound Direct labor: 5 hours at $13 per hour Variable overhead: 5 hours at $8 per hour Total standard variable cost per unit $ 80.00 65.00 40.00 $ 185.00 The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses Fixed Cost per Month $ 290,000 $ 280,000 Variable Cost per Unit Sold $ 21.00 $ 12.00 The planning budget for March was based on producing and selling 15,000 units. However, during March the company actually produced and sold 17,000 units and incurred the following costs: a. Purchased 170,000 pounds of raw materials at a cost of $8.00 per pound. All of this material was used in production. b. Direct-laborers worked 64,000 hours at a rate of $14.00 per hour. c. Total variable…arrow_forwardPreble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 8 pounds at $10.00 per pound $ 80.00 Direct labor: 5 hours at $13 per hour 65.00 Variable overhead: 5 hours at $8 per hour 40.00 Total standard variable cost per unit $ 185.00 The company also established the following cost formulas for its selling expenses: Fixed Cost per Month Variable Cost per Unit Sold Advertising $ 290,000 Sales salaries and commissions $ 280,000 $ 21.00 Shipping expenses $ 12.00 The planning budget for March was based on producing and selling 15,000 units. However, during March the company actually produced and sold 17,000 units and incurred the following costs: a. Purchased 170,000 pounds of raw materials at a cost of $8.00 per pound. All of this material was used in production. b. Direct-laborers worked 64,000 hours at a rate…arrow_forwardHookline Inc. Company is a manufacturing company that produces a single product. It has two direct-cost categories: applied to production on the basis of direct labor-hours. Following is the standard cost per unit for the Hookline Inc.: Input Cost per Output Unit Direct materials: 5 pounds at $8 per pound Direct labor: 2 hours at $14 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $40 28 10 $78 The budgeted production and sales volume was 25,000 units. During July, Hookline Inc. produced 30,000 units. The fe Materials purchased and used: 160,000 pounds at $7.5 per pound Direct labor: Variable mamufacturing overhead occurred for the month: $280,500 55,000 hours used at a rate of $15 per hour Required: For the month of July, computer the following variances, indicating whether each is favorable(F) or unfavorable (U): 1. Direct materials price variance, based on purchases 2. Direct materials efficiency variance 3. Direct manufacturing labor price variance…arrow_forward
- Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 4 pounds at $9.00 per pound Direct labor: 3 hours at $15 per hour Variable overhead: 3 hours at $6 per hour Total standard variable cost per unit The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses Fixed Cost per Month $36.00 45.00 18.00 $99.00 $ 210,000 $ 120,000 Variable manufacturing overhead cost Variable Cost per Unit Sold $ 13.00 $ 4.00 The planning budget for March was based on producing and selling 26,000 units. However, during March the company actually produced and sold 31,000 units and incurred the following costs: a. Purchased 155,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b. Direct-laborers worked 56,000 hours at a rate of $16.00…arrow_forwardGadubhaiarrow_forwardGent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4,200 units were produced: Direct materials $4.00 Direct labor 1.50 Manufacturing overhead 1.30 Total $6.80 Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 5,900 units of part A for the next year’s production. Cory Corporation has offered to supply 5,900 units of part A at a price of $7.00 per unit. If Gent accepts the offer, all of the variable costs and $1,260 of the fixed costs will be avoided. A. Calculate the differential cost? Cost to buy $_____ Cost to make _____ Differential cost $_____ B. Should Gent Designs accept the offer from Cory Corporation? Gent Designs ______arrow_forward
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