The following information rel tö questions Lugger Ltd is a small engineering company in which one department manufactures a specialised component for another company. Currently the annual demand for this component is 9,000 units and the price is £20 per unit. The annual budgeted costs for the component are set out below. Materials 63,000 Direct labour 18,000 Machine lease 25,000 costs Other fixed costs 45,000 Total costs 151,000 Direct labour represents the full cost of employing the two workers who operate the machine, their wages are not dependent on the level of production. Recently Lugger has discussed the possibility of leasing a different machine. This would enable cheaper raw materials to be used, costing only £3 per unit. The new machine would have an annua lease payment of £55,000. ki0 Calculate margin of safety for the present machine and optional one, using current demand. Give your answers in terms of units produced. Present Optional A. 3,615 3,117 B. 2,230 3,823 2,230 +) 2,058 3,615 4,882

The following information rel tö questions Lugger Ltd is a small engineering company in which one department manufactures a specialised component for another company. Currently the annual demand for this component is 9,000 units and the price is £20 per unit. The annual budgeted costs for the component are set out below. Materials 63,000 Direct labour 18,000 Machine lease 25,000 costs Other fixed costs 45,000 Total costs 151,000 Direct labour represents the full cost of employing the two workers who operate the machine, their wages are not dependent on the level of production. Recently Lugger has discussed the possibility of leasing a different machine. This would enable cheaper raw materials to be used, costing only £3 per unit. The new machine would have an annua lease payment of £55,000. ki0 Calculate margin of safety for the present machine and optional one, using current demand. Give your answers in terms of units produced. Present Optional A. 3,615 3,117 B. 2,230 3,823 2,230 +) 2,058 3,615 4,882

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...

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Company A produces a component used in the production of one of the company’s main products.The costs are budgeted as follows:Amount per unit (R) Amount per 5 000 units (R)Materials 5 25 000Labour 15 75 000Variable overhead 10 50 000Depreciation 4 20 000Allocated general overhead 12 60 000Total cost 46 230 000The components can be purchased from an outside supplier at a cost of R35 per unit. Determine whether the company should make or buy the component. In arriving at your solution clearly show all your workings.
Company A produces a component used in the production of one of the company’s main products.The costs are budgeted as follows:Amount per unit (R) Amount per 5 000 units (R)Materials 5 25 000Labour 15 75 000Variable overhead 10 50 000Depreciation 4 20 000Allocated general overhead 12 60 000Total cost 46 230 000The components can be purchased from an outside supplier at a cost of R35 per unit.Required:Q.3.2 State five qualitative aspects that the company must evaluate before making a decision in Q.3.1 above.Q.3.3 Briefly explain the difference between avoidable costs, differential costs and opportunity costs. Provide one example of each cost.Q.3.4 List two examples of scenarios where relevant costing can be used effectively in decision‐making.
Mike. Inc has two products A and B. The budgeted fixed manufacturing overhead is $10,000. The departmentis expected to work in full capacity. It plans to use cost-based pricing by using the absorption method. Assumethe firm can produce and sell 1,000 units Product A and 1,000 units Product B. Product A Product BDirect Materials $3 $2Direct Labor $1 $3Variable Manufacturing Overhead $2 $1Budgeted labor hours used for each unit product 1 4Budgeted machine hours used for each unit product 3 1Sale Demand 1,000 1,000 Product A…
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QUESTION 4 Answer the questions from the information provided. 4.1 Study the ratios given below that were calculated for Project Mel for 2020 and 2019 and provide suitable comments for each one. INFORMATION 2020 2019 Operating profit margin 20% 14% Trade receivables period 35.78 days 28.75 days Acid test ratio 0.88:1 1.25:1 Return on capital employed 15.63% 21.67% Additional information : The interest rate on loans is 16%. : The credit terms to debtors are 30 days. 4.2 Use the information provided below to calcutate and comment on the following variances for September 2020. Your answers must indicate whether the variance is favourable or adverse. 4.2.1 Direct material usage variance 4.2.2 Variable overheads efficiency variance 4.2.3 Direct labour rate variance 4.2.4 Direct labour efficiency variance.
Check n Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information. Lenses Mirrors Units produced Material moves per product line Direct-labor hours per unit 23 23 17 160 160 The total budgeted material-handling cost is $70,840. Required: 1. Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one lens would be what amount? 2. Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one mirror would be what amount? 3. Under activity-based costing (ABC), the material-handling costs allocated to one lens would be what amount? The cost driver for the…