Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter 12, Problem 12P
1a.
To determine
The utilization rate is a performance indicator used to make plans and determine the company's success. It is used by manufacturing companies. The utilization rate of equipment can be increased by avoiding machine breakdowns and reducing average setup times.
:
The utilization rate.
2a.
To determine
The difference between the output power and input power is termed loss. The utilization loss can occur due to regular unplanned maintenance, machine breakdown, or higher average setup times.
:
The utilization loss during the week.
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Problem 7-44 Break-Even Analysis; Operating Leverage; New Manufacturing Environment (LO 7-1, 7-8, 7-
10)
[The following information applies to the questions displayed below.]
Celestial Products, Inc., has decided to introduce a new product, which can be manufactured by either a computer-
assisted manufacturing system or a labor-intensive production system. The manufacturing method will not affect the
quality of the product. The estimated manufacturing costs by the two methods are as follows:
Computer-Assisted
Manufacturing System
Labor-Intensive
Production System
2$
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
8.10
10.50 0.8DLH @ $16.50
6.00 0.8DLH @ $12.00
9.00
13.20
9.60
$2,280,000
$
0.5DLH @ $21.00
0.5DLH @ $12.00
$3,960,000
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
The company's marketing research department has recommended an introductory unit…
Problem 7-44 Break-Even Analysis; Operating Leverage; New Manufacturing Environment (LO 7-1, 7-8, 7-
10)
[The following information applies to the questions displayed below.]
Celestial Products, Inc., has decided to introduce a new product, which can be manufactured by either a computer-
assisted manufacturing system or a labor-intensive production system. The manufacturing method will not affect the
quality of the product. The estimated manufacturing costs by the two methods are as follows:
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
Problem 7-44 Part 1
Computer-Assisted
Manufacturing System
Computer-assisted manufacturing system
Labor-intensive production system
0.5DLH @ $19.50
0.5DLH @ $10.50
Break-Even Point
7.80
9.75
5.25
$3,810,000
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
units
units
Labor-Intensive
Production System
The company's marketing…
Chapter 12 Solutions
Managerial Accounting
Ch. 12 - Prob. 1QCh. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4QCh. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Prob. 7QCh. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - Prob. 10Q
Ch. 12 - Prob. 1AECh. 12 - Prob. 2AECh. 12 - Prob. 1ECh. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21C
Knowledge Booster
Similar questions
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