Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 13, Problem 24P
Problem 6-25A Effect of order quantity on special order decision
Dalton Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Dalton made 20,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
| Materials cost ($10 per unit × 20,000) | $200,000 |
| Labor cost ($9 per unit × 20,000) | 180,000 |
| Manufacturing supplies ($1.50 × 20,000) | 30,000 |
| Batch-level costs (20 batches at $2,000 per batch) | 40,000 |
| Product-level costs | 80,000 |
| Facility-level costs | 145,000 |
| Total costs | $675,000 |
| Cost per unit = $675,000 ÷ 20,000 = $33,75 |
Required
- a. Sunny Motels has offered to buy a batch of 500 blankets for $23.50 each. Dalton’s normal selling price is $45 per unit. Based on the preceding quantitative data, should Dalton accept the special order? Support your answer with appropriate computations.
- b. Would your answer to Requirement a change if Sunny offered to buy a batch of 1,000 blankets for $28 per unit? Support your answer with appropriate computations.
- c. Describe the qualitative factors that Dalton Quilting Company should consider before accepting a special order to sell blankets to Sunny Motels.
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Question No. 7
During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound.
Actual costs incurred in the production of 5,000 units were as follows
Total direct labor cost 100,000 @10 per hour
Cost of Material used 70,000
The standards for one units of company product are as follows
Direct Labor
Direct Material
- 3 hours required for one unit
- Rate 24 per hour
-2 pounds of Material required for one unit
- Price 20 per pound
Required:
a. Compute the following
Material variance
• Material quantity variance
Material price variance
b. Being an accounting expert, elaborate that how standard costing system facilitates
managerial planning, reduction in production costs and decision making. Use your
analytical thinking to answer the question (Word limit: 150-200 words max)
Exercise 1
Canandaigua container company manufacturer recyclable soft drinks cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production engineering staff and the controller.
Direct labour: Direct material
Quantity -.30 hour Quantity 5 kilogram
Rate -OMR 13 per hour Price OMR 1.10 per kilogram
Actual material purchases amounted to 25,000 kilograms at OMR1.20 per kilogram. Actual cost incurred in the production of 4,000 Units were as follows:
Direct Labor - OMR 22,500 for 1500 hours
Direct Material - OMR 26,400 for 22,000 kilogram.
Required:
Use the variance formulas to compute the direct material price and quantity variances, the direct material purchase price variance and direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
Item 3
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently created a standard cost system to help control costs and has established the following standards for the Maze toy:
Direct materials: 6 microns per toy at $0.32 per micron
Direct labor: 1.3 hours per toy at $6.70 per hour
During July, the company produced 5,400 Maze toys. The toy's production data for the month are as follows:
Direct materials: 73,000 microns were purchased at a cost of $0.30 per micron. 32,500 of these microns were still in inventory at the end of the month.
Direct labor: 7,420 direct labor-hours were worked at a cost of $52,682.
Required:
1. Compute the following variances for July: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations. Round final answer to the nearest whole dollar amount.)
a. The materials price…
Chapter 13 Solutions
Survey Of Accounting
Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Prob. 7QCh. 13 - Prob. 8QCh. 13 - Prob. 9QCh. 13 - Prob. 10Q
Ch. 13 - Prob. 11QCh. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - Prob. 17QCh. 13 - Prob. 18QCh. 13 - Prob. 19QCh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Exercise 6-5AOpportunity costs Norman Dowd owns...Ch. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Exercise 6-11AEstablishing price for an...Ch. 13 - Exercise 6-12AOutsourcing decision with...Ch. 13 - Exercise 6-13AOutsourcing decision affected by...Ch. 13 - Prob. 14ECh. 13 - Exercise 6-15ASegment elimination decision Dudley...Ch. 13 - Prob. 16ECh. 13 - Exercise 6-17AAsset replacementopportunity cost...Ch. 13 - Prob. 18ECh. 13 - Exercise 6-19A Asset replacement decision Mead...Ch. 13 - Exercise 6-20A Asset replacement decision Kahn...Ch. 13 - Exercise 6-21A Annual versus cumulative data for...Ch. 13 - Problem 6-23A Context-sensitive relevance Required...Ch. 13 - Problem 6-24A Context-sensitive relevance...Ch. 13 - Problem 6-25A Effect of order quantity on special...Ch. 13 - Problem 6-26A Effects of the level of production...Ch. 13 - Problem 6-28A Eliminating a segment Western Boot...Ch. 13 - Effect of activity level and opportunity cost on...Ch. 13 - Problem 6-30A Comprehensive problem including...Ch. 13 - Prob. 29PCh. 13 - ATC 6-1 Business Application Case Analyzing...Ch. 13 - ATC 6-2 Group Assignment Relevance and cost...Ch. 13 - Prob. 3ATCCh. 13 - Prob. 4ATCCh. 13 - Prob. 5ATC
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