Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Question
Chapter 12, Problem 5E
1.
To determine
The utilization rate is the performance indicator that is used to make plans and determine the success of the company. It is used by manufacturing companies. The utilization rate of equipment can be increased by avoiding machine breakdowns and reducing the average setup times.
:
The utilization rate.
2.
To determine
The efficiency rate is the performance indicator that is used to make plans and determine the success of the company. It is used by manufacturing companies. The efficiency rate of equipment can be increased by avoiding minor work stoppages and properly training operators to maintain the machine regularly.
:
The efficiency rate.
3.
To determine
The quality rate is used by the company in order to determine the percentage of manufacturing time that is truly productive or defect-free. The quality rate of equipment can be improved by minimizing the number of defective units manufactured as a percent of the total units manufactured.
:
The quality rate.
4.
To determine
The overall equipment effectiveness includes utilization rate, efficiency rate, and quality rate. In the other words, the overall equipment effectiveness is used to measure the productivity of equipment in terms of quality, efficiency, and utilization.
:
The overall equipment effectiveness (OEE).
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Students have asked these similar questions
Ql:
The costs listed below relate to a variety of different decision situations.
Cost
Unavoidable fixed overhead
Decision
1
Eliminate an unprofitable segment
2
Direct labor
Make or buy
Equipment replacement
Sell or process further
Accepting a special order
3
Original cost of old equipment
Joint production costs
Opportunity cost
4
5
Segment manager's salary
Cost of new equipment
Incremental production costs
Eliminate an unprofitable segment
(manager will be terminated)
Equipment replacement
Sell or process further
6
7
8
Equipment replacement (the amount
of materials required does not
change)
Purchase or lease a building
9
Direct materials
10
Rent expense
Instructions
For each cost listed above, indicate if it is relevant or not to the related decision. For those
costs determined to be irrelevant, briefly explain why
Required information
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
8.10
Labor-Intensive
Production System
$
Direct material
Direct labor (DLH denotes direct-labor hours)
Variable overhead
Fixed overhead*
9.00
13.20
9.60
$2,280,000
2$
0.5DLH @ $21.00
0.5DLH @ $12.00
10.50 0.8DLH @ $16.50
6.00 0.8DLH @ $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…
Required information
[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*
Computer-Assisted
Manufacturing System
$
Volume
0.5DLH @ $25.50
0.5DLH @ $16.50
9.00
12.75
8.25
$4,410,000
units
Labor-Intensive
Production System
$
0.8DLH @ $21.00
0.8DLH @ $16.50
*These costs are directly traceable to the new product line. They would not be incurred if the new product were not
produced.
9.90
16.80
13.20
$2,730,000
The company's marketing research department has recommended an introductory unit sales price of $75.00. Selling
expenses are estimated to be $900,000…
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
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