FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Summer company manufactures beach chairs. $ 4.00 of direct materials are needed for each chair. Labor is $ 15 an hour. The company manufactures 3 chairs per hour. Indirect costs are $ 9.00 per hour. Commissions to sellers are $ 2.00 per unit sold. The cost of a chair will be:arrow_forwardSheridan Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 51% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 31,700 curtain rods per year. A supplier offers to make a pair of finials at a price of $13.05 per unit. If Sheridan Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $46,900 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) Direct materials Direct labor Variable overhead costs Fixed manufacturing costs Purchase price Make $ Buy…arrow_forwardLeeds Corp. produces product BR500. Shamokin expects to sell 10,000 units of BR500 and to have an ending finished inventory of 2,000 units. Currently, it has a beginning finished inventory of 800 units. Each unit of BR500 requires two labor operations, one labor hour of assembling and two labor hours of polishing. The direct labor rate for assembling is $10 per assembling hour and the direct labor rate for polishing is $12.50 per polishing hour. The expected number of hours of direct labor for BR500 for this period are O 8,800 hours of assembling; 17,600 hours of polishing O 11,200 hours of assembling: 22,400 hours of polishing 17,600 hours of assembling: 8,800 hours of polishing O 22,400 hours of assembling: 11,200 hours of polishingarrow_forward
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- Sheridan Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 50% of direct labour costs. The direct materials and direct labour costs per unit to make the lampshades are $4.50 and $5.50, respectively. Normal production is 48,000 table lamps per year. A supplier offers to make the lampshades at a price of $13.20 per unit. If Sheridan Inc. accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $40,000 of fixed manufacturing overhead currently being charged to the lampshades will have to be absorbed by other products. Prepare the incremental analysis for the decision to make or buy the lampshades. (Round answers to O decimal places, e.g. 5,275. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). While alternate approaches are…arrow_forwardLay's Potato Chips is examining their Wavy Lays chip line. They began the year expecting to produce 500,000 bags of potato chips. They projected that each bag would require 3 pounds of potatos and 1.5 hours of labor to manufacture. They planned to pay $2 per pound for potatos and $20 per hour for labor. They also budgeted $900,000 for variable manufacturing overhead costs and $ 450,000 of fixed manufacturing overhead costs, with both variable and fixed manufacturing overhead costs being allocated based on direct labor hours. At the end of the year, Lay's finds that they produced 880,000 bags of potato chips, using 3.25 pounds of potatos per bag and 1.25 hours of labor per bag. Due to significant inflation, the purchasing department made a deal with the supplier and purchased 3,000,000 pounds of potatos for a per-pound price of $3.25. They also spent $22 per hour for direct labor. The Wavy Lays chip line spent $843,000 on variable manufacturing overhead costs and $562,000 on fixed…arrow_forwardIvanhoe Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 61% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 32,300 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.90 per unit. If Ivanhoe accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $46,500 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45)) Direct materials Direct labor Variable overhead costs Fixed manufacturing costs Purchase price Total annual cost (c) (b)…arrow_forward
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