Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 19P
Problem 4-22A Allocating indirect costs between products
Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $7,500. The booth will be open 30 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $150 per package. She will continue to sell the existing product, EZRecords, which costs $100 per package. Ms. Garcia believes that the salesperson will spend approximately 20 hours selling EZRecords and 10 hours marketing ProOffice.
Required
- a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 80 units of EZRecords and 50 units of ProOffice.
- b. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 200 units of EZRecords and 100 units of ProOffice.
- c. Explain why the cost per unit figures calculated in Requirement a are different from the amounts calculated in Requirement b. Also explain how the differences in estimated cost per unit will affect pricing decisions.
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Question 3
Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $30 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $16 and the labor cost would be $10 per set and that it would have to purchase cutting and sewing equipment, which would add $25,000 to annual fixed costs.
NOTE: No need to enter comma between numbers
Required
Computation for 10,000 units
What amount should have been inccrued if company produce 10,000 units
What amount should have been inccrued if company purhcase 10,000 units from outside
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Question 1
Wood Creations designs, manufactures, and sells modern wood sculptures. Sally Jensen is
an artist for the company. Jensen has spent much of the past month working on the design
of an intricate abstract piece. Jim Smoot, product development manager, likes the design.
However, he wants to make sure that the sculpture can be priced competitively. Alexis
Nampa, Wood's cost accountant, presents Smoot with the following cost data for the
expected production of 75 sculptures:
$ 8,000
30,000
37,000
33,000
25,000
15,000
Design cost
Direct materials
Direct manufacturing labor
Variable manufacturing overhead
Fixed manufacturing overhead
Marketing
Required:
1. Smoot thinks that Wood Creations can successfully market each piece for $2,400. The
1)(a) ignore above info,
suppose aim to earn 20%
market price
company's target operating income is 20% of revenue.
$2,400
75units a.) Wood Creations has a total capital investment of $240,000. Compute the target
percentage of return on investment.…
QUESTION 6
Wok Around the Clock, Inc., sells specialty woks. In the current year it expects to incur $810,000 in variable costs and $140,000 in fixed costs to
make and sell 10,000 woks at $100 each.
If Wok Around the Clock accepts a special order from Hard Wok Cafe to purchase 1,000 woks at $75. Wok Around the Clock will also have to pay
$1,200 in shipping costs to deliver the special order. How much would it make or lose on this special order?
ENTER A LOSS WITH A "-" SIGN. DO NOT USE PARENTHESES. EXAMPLE: -1,000
QUESTION 7
Daffy Duct, Inc., has the capacity to produce 12,000 cases of duct tape per year but only produces and sells 10,000 cases at $50 per case. The
direct materials equals $130,000, direct labor equals $110,000, and overhead equals $100,000. Sixty percent of the manufacturing overhead is
variable. The forty percent of fixed overhead is allocated equally to all products.
Dewey, Cheatum & Howe has offered to purchase 1,000 cases but at a reduced price of $40 per case. What…
Chapter 12 Solutions
Survey Of Accounting
Ch. 12 - 1.What is a cost object? Identify four different...Ch. 12 - Prob. 2QCh. 12 - 3.If the cost object is a manufactured product,...Ch. 12 - Prob. 4QCh. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Prob. 7QCh. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - 10.Why are some manufacturing costs not directly...
Ch. 12 - Prob. 11QCh. 12 - 12.On January 31, the managers of Integra, Inc....Ch. 12 - 13.Respond to the following statement: The...Ch. 12 - Prob. 14QCh. 12 - Define the term cost pool. How are cost pools...Ch. 12 - LO 4-1Exercise 4-1A Direct versus indirect costs...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Exercise 4-4APooling overhead cost Ware...Ch. 12 - Prob. 5ECh. 12 - Exercise 4-5A Allocating overhead cost among...Ch. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Exercise 4-6AAllocating overhead costs among...Ch. 12 - Exercise 4-9AAllocating to solve a timing problem...Ch. 12 - Prob. 11ECh. 12 - Exercise 4-11AHow the allocation of fixed cost...Ch. 12 - Prob. 13ECh. 12 - Problem 4-17A Cost accumulation and allocation...Ch. 12 - Problem 4-18A Selecting an appropriate cost driver...Ch. 12 - Problem 4-19A Cost allocation in a service...Ch. 12 - Prob. 17PCh. 12 - Problem 4-21A Allocation to accomplish smoothing...Ch. 12 - Problem 4-22A Allocating indirect costs between...Ch. 12 - Prob. 20PCh. 12 - Prob. 1ATCCh. 12 - Prob. 2ATCCh. 12 - ATC 4-3 Research Assignment Using real-world data...Ch. 12 - Prob. 4ATCCh. 12 - Prob. 5ATC
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