Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2, Problem 48P
Hightide Upholstery Company manufactures a special fabric used to upholster the seats in power boats. The company’s annual fixed production cost is $100,000.
Required:
- 1. Draw a graph of the company’s fixed production cost showing the total cost at the following production levels of upholstery fabric: 10,000 yards, 20,000 yards, 30,000 yards, and 40,000 yards.
- 2. Prepare a table that shows the unit cost and the total cost for the firm’s fixed production costs at the following production levels: 1 yard, 10 yards, 10,000 yards, and 40,000 yards.
- 3. Prepare a graph that shows the unit cost for the company’s fixed production cost at the following production levels: 10,000 yards, 20,000 yards, 30,000 yards, and 40,000 yards.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Pomona Sprout Products Inc. produces a number of products, including
handmade large fiberglass planters for outdoor displays. The firm, which
began operations at the beginning of the current year, uses a standard cost
system. The standard costs for one large planter are provided below:
Direct Materials (3kg @ C$
C$ 24.00
8.00 per kg)
Direct labor (2hrs @ C$
C$ 30.00
15.00 per hr)
Variable Overhead
C$ 24.00
Fixed Overhead
C$ 6.00
Standard Cost per unit
C$ 84.00
The C$6.00 fixed overhead rate is based on total budgeted fixed overhead
costs of C$18,000 and estimated sales of 3,000 units. There were no
changes in any inventory account during the period. The company produced
and sold 3,100 units at the following costs:
Direct Materials (9,000 kg) C$ 81,270
Direct labor (6,000 hrs)
C$ 78,000
Variable Overhead
C$ 76,000
Fixed Overhead
C$ 16,500
Total production costs
C$ 251,770
incurred
Prepare a complete performance report for the current year that includes
the planning budget and flexible…
Ho Cabinet Company has developed the following overhead cost formulas:
Overhead Cost
Cost Formula
Depreciation
$600
Lubrication
$150 plus $0.70 per machine hour
Utilities
$0.50 per machine hour
Based on these cost formulas, the total overhead cost expected for Ho Cabinet Company if 1,200 machine hours are worked is:
The controller of Ferrence Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:
The total materials handling cost for the year is expected to be $16,486.40.
If the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost should be allocated to the specialty windows? (Round off your answer to the nearest whole dollar.)
Question 12 options:
$3,266
$9,274
$8,243
$6,595
Chapter 2 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 2 - Distinguish between product costs and period...Ch. 2 - Why are product costs also called inventoriable...Ch. 2 - What is the most important difference between a...Ch. 2 - List several product costs incurred in the...Ch. 2 - Prob. 5RQCh. 2 - Why is the cost of idle time treated as...Ch. 2 - Explain why an overtime premium is included in...Ch. 2 - Prob. 8RQCh. 2 - Give examples to illustrate how the city of Tampa...Ch. 2 - Distinguish between fixed costs and variable...
Ch. 2 - How does the fixed cost per unit change as the...Ch. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - Would each of the following characteristics be a...Ch. 2 - List three direct costs of the food and beverage...Ch. 2 - List three costs that are likely to be...Ch. 2 - Which of the following costs are likely to be...Ch. 2 - Distinguish between out-of-pocket costs and...Ch. 2 - Define the terms sunk cost and differential cost.Ch. 2 - Distinguish between marginal and average costs.Ch. 2 - Prob. 21RQCh. 2 - Two years ago the manager of a large department...Ch. 2 - Indicate whether each of the following costs is a...Ch. 2 - For each case below, find the missing amount.Ch. 2 - A foundry employee worked a normal 40-hour shift,...Ch. 2 - A loom operator in a textiles factory earns 16 per...Ch. 2 - Consider the following costs that were incurred...Ch. 2 - Alexandria Aluminum Company, a manufacturer of...Ch. 2 - Prob. 30ECh. 2 - A hotel pays the phone company 100 per month plus...Ch. 2 - Prob. 32ECh. 2 - Orbital Communications, Inc. manufactures...Ch. 2 - The state Department of Education owns a computer...Ch. 2 - Prob. 35ECh. 2 - List the costs that would likely be included in...Ch. 2 - Consider the following cost items: 1. Salaries of...Ch. 2 - The following selected information was extracted...Ch. 2 - Prob. 39PCh. 2 - Mason Corporation began operations at the...Ch. 2 - Determine the missing amounts in each of the...Ch. 2 - The following cost data for the year just ended...Ch. 2 - The following data refer to San Fernando Fashions...Ch. 2 - Highlander Cutlery manufactures kitchen knives....Ch. 2 - Cape Cod Shirt Shop manufactures T-shirts and...Ch. 2 - Heartland Airways operates commuter flights in...Ch. 2 - San Diego Sheet Metal, Inc. incurs a variable cost...Ch. 2 - Hightide Upholstery Company manufactures a special...Ch. 2 - For each of the following costs, indicate whether...Ch. 2 - Indicate for each of the following costs whether...Ch. 2 - Water Technology, Inc. incurred the following...Ch. 2 - The following terms are used to describe various...Ch. 2 - Several costs incurred by Bayview Hotel and...Ch. 2 - Refer to Exhibit 23, and answer the following...Ch. 2 - Roberta Coy makes custom mooring covers for boats....Ch. 2 - The Department of Natural Resources is responsible...Ch. 2 - Prob. 57PCh. 2 - Prob. 58PCh. 2 - CompTech, Inc. manufactures printers for use with...Ch. 2 - You just started a summer internship with the...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Light Up Corporation manufactures and sells two types of decorative lamps, Knox and Ayer. The following data are available for the year 2020. Machine setup-hours is the only driver of manufacturing overhead costs. Light Up has a set up capacity of 960 hours. (Click the icon to view the information.) Calculate the manufacturing overhead costs budget (label it Schedule 5). Schedule 5: Manufacturing Overhead Costs Budget for the Year Ending December 31, 2020 Machine Setup Overhead Costs Total manufacturing overhead costsarrow_forwardVintage Audio Inc. manufactures audio speakers. Each speaker requires $96 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period: Speaker assembly cell, estimated costs: Labor Depreciation Supplies Power Total cell costs for the period The operating plan calls for 195 operating hours for the period. Each speaker requires 12 minutes of cell process time. The unit selling price for ach speaker is $260. During the period, the following transactions occurred: 1. Purchased materials to produce 650 speaker units. 2. Applied conversion costs to production of 620 speaker units. 3. Completed and transferred 590 speaker units to finished goods. 4. Sold 565 speaker units. There were no inventories at the beginning of the period. a. Journalize the summary transactions (1)-(4) for the period. Round the per unit cost to the nearest cent and use in subsequent computations. If an amount box does not require an entry, leave it blank.…arrow_forwardSparkle Corporation manufactures and sells two types of decorative lamps, Knox and Ayer. The following data are available for the year 2020. Machine setup-hours is the only driver of manufacturing overhead costs. Sparkle has a set up capacity of 2,220 hours. (Click the icon to view the information.) Calculate the manufacturing overhead costs budget (label it Schedule 5). Schedule 5: Manufacturing Overhead Costs Budget for the Year Ending December 31, 2020 Machine Setup Overhead Costs Total manufacturing overhead costs Data table 1. Quantity of lamps to be produced 2. Number of lamps to be produced per batch 3. Setup time per batch Variable cost = $70 per setup-hour Fixed cost = - $79,000 Knox 21,000 lamps 50 lamps/batch 3 hours/batch Ayer 12,000 lamps 50 lamps/batch 4 hours/batch Xarrow_forward
- One of Astro Company's activity cost pools is machine setups, with estimated overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers?arrow_forwardKelly Fabrics manufactures a specialty monogrammed blanket. The following are the cost standards for this blanket: (Click the icon to view the standards.) Actual results from last month's production of 2,500 blankets are as follows: (Click the icon to view the actual results.) Read the requirements. Requirement 1. What is the standard direct material cost for one blanket? (Round your answer to the nearest cent.) The standard direct material cost for one blanket is Requirements 1. What is the standard direct material cost for one blanket? 2. What is the actual cost per yard of fabric purchased? 3. Calculate the direct material price and quantity variances. 4. What is the standard direct labor cost for one blanket? 5. What is the actual direct labor cost per hour? 6. Calculate the direct labor rate and efficiency variances. 7. Analyze each variance and speculate as to what may have caused that variance. 8. Look at all four variances together (the big picture). How might they all be…arrow_forwardZippy Inc. manufactures a fuel additive, Surge, which has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your examination of Zippy's financial statements for the year ended September 30, management has asked you to review some computations made by Zippy's cost accountant. Your working papers disclose the following about the company's operations: Standard costs per drum of product manufactured: Materials: 8 gallons of chemicals @ $2. $16 1 empty drum. $17 Direct labor-1 hour. $10 Factory Overhead. $ 6 Costs and expenses during September: Chemicals: 645,000 gallons purchased at a cost of $1,140,000; 600,000 gallons used. Empty drums: 94,000 purchased at a cost of $94,000; 80,000 drums used. Direct labor: 81,000 hours worked at a cost of $816,480. Factory overhead: $768,000. REQUIRED: Calculate the following for September, using the formulas in Determination of Variances on pages 421–422 and 424 (Round unit…arrow_forward
- A VACUUM MANAUFACTUER HAS PREPARED THE FOLLOWING HAS THE FOLLOWING COST DATA FOR MANUFACTURING ONE OF ITS ENGINE COMPONENTS BASED ON THE ANNUAL PRODUCTION OF 50,000 UNITS DIRECT MATERIALS $75,000 DIRECT LABOR $100,000 TOTAL $175,000 IN ADDITION, VARIABLE FACTORY OVERHEAD IS APPLIED AT $7.50 PER UNIT. FIXED FACTORY OVERHEAD IS APPLIED AT 150% OF DIRECT LABOUR COST PER UNIT. THE VACUUM SELLS FOR $150 EACH. A THIRD PARTY HAS OFFERED TO MAKE THE ENGINES FOR $60 PER UNIT. 75% OF THE FIXED FACTORY OVERHEAD, WHICH REPRESENTS EXECUTIVE SALARIES, RENT, DEPRECIATION, AND TAXES, CONTINUES REGARDLESS OF DECISION. sHOULD THE COMPANY MAKE OR BUY THE ENGINES?arrow_forwardThe table below shows information on the material cost, demand and production hours for parts in a cylinder head machining plant. Five parts are to be considered for an automated FMS for the plant. The parts were initially sourced from a vendor at a purchase prices given in the table below. Because of the proposed 2 shifts, the shop will be available 440 hours / month and charged at R1000 / hour. Part type Description 1 4 5 1. Purchase price (R) / unit 6000 2500 8000 2000 3000 2. Material cost (R) 600 500 100 800 900 3. Demand / month 80 70 60 50 30 4. Hours / unit 3 4. 5. Savings / unit 6. Hours / month, p 7. Savings / hour 8. Savings / month, s 9. si / pi Compute the missing values for savings/unit, Hours / month, Savings /hour, Savings / month and answer the following: 1. Savings / unit for part type 1 2. Savings / unit for part type 2 3. Savings / unit for part type 3 4. Savings / unit for part type 4 5. Savings / unit for part type 5 6. s1 / p1 7. s2 / p2 2.arrow_forwardDartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. Number of setups and number of components are identified as activity-cost drivers for overhead. The standard model requires 19 setups and 9 components. The standard model's overhead costs are $50,000. The deluxe model requires 31 setups and 18 components. The deluxe model's overhead costs are $102,600. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model?arrow_forward
- Rundle Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials. Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rundle for $2.60 each. Required a. Calculate the total relevant cost. Should Rundle continue to make the containers? b. Rundle could lease the space it currently uses in the manufacturing process. If leasing would produce $11,600 per month, calculate the total avoidable costs. Should Rundle continue to make the containers? Answer is complete but not entirely correct. $ a. Total relevant cost a. Should Rundle continue to make the containers? b. Total avoidable cost b. Should Rundle continue to make the containers? 190.650,000 Yes $24,180,000 $ 5,200 6,100 4,000 7,800…arrow_forwardOak Valley Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $8 per square foot from the supplier. Delivery costs are $0.20 per square foot. Carpenters' wages are $30 per hour. Payroll costs are $3.00 per hour, and benefits are $5 per hour. How much is the direct materials standard cost per square foot? A. $8.20 B. $11.20 C. $13.20 D. $8.00arrow_forwardBox Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cost Classifications - Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=QQd1_gEF1yM;License: Standard Youtube License