FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Tidwell, Inc., has two plants that manufacture a line of wheelchairs. One is located in Dallas, and the other in Oklahoma City. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for $1,782. Sales volume averages 20,000 units per year in each plant. Recently, the Dallas plant reduced the price of the tilt model to $1,584. Discussion with the Dallas manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called “non-value-added costs.” The Dallas manufacturing and selling costs for the tilt model were $1,386 per unit. The Dallas manager offered to loan the Oklahoma City plant his cost
The plant controller and the Dallas cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices.
|
SQ |
AQ |
Actual Cost |
|
|
Materials (lbs.) |
940,500 |
990,000 |
$20,790,000 |
|
Labor (hrs.) |
225,720 |
237,600 |
2,970,000 |
|
Setups (hrs.) |
— |
15,840 |
1,188,000 |
|
Materials handling (moves) |
— |
39,600 |
2,772,000 |
|
Warranties (no. repaired) |
— |
39,600 |
3,960,000 |
|
Total |
$31,680,000 |
Required:
4. There are four data analytic types: descriptive, diagnostic, predictive, and prescriptive. Choose which data analytic type(s) apply for each of the following (justify your selection):
a. The target cost calculated in Requirement 1.
b. The calculation of the non-value added cost in Requirement 2.
c. The assessment of whether the target cost can be achieved.
d. The actions recommended
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