Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Question
Chapter 3, Problem 7CE
1.
To determine
2.
To determine
Calculate the total labor cost, average cost per engine for the following engines: one, four, and sixteen.
3.
To determine
Calculate budgeted labor cost for an engine design which Company P has built, and budgeted labor cost for new engine design for company P’s workers have never made before.
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The manufacturing process of a new product is very labor intensive. The learning curve percentage (LC) for the process is 90%. It took 30 hours with 15 workers together to produce the first product. The average labor cost including overhead expenses is about $20 per hour.
(a) Estimate the labor cost (including overhead expenses) to produce the tenth product? (Hint: 2 steps. How long is T_10? How much is the cost?)
(b) A new training program is intended to lower the learning-curve percentage by 10% (minus 10%). If the program is successful, what cost savings will be realized for the tenth unit? (Hint: How long is the new T_10? How much is the new cost? How much is the cost saving?)
ABC Company is producing and selling Product X. Company management anticipates that a 70% learning curve will apply to
the production of a new item.
The cost of first item is $1,500 in materials. First item will take 500 labor hours. The cost per labor hour is $4 per hour.
Variable overheads are 130% of labor costs.
ABC Company has a profit mark-up for its products in amount of 20%.
What is the cost of the third unit of Product X?
O $3.238
$3,420
O $2.620
O $2.788
Learning CurveBordner Company manufactures HVAC (heating, ventilation, and air conditioning) systems for commercial buildings. For each new design, Bordner faces a 90 percent learning rate. On aver-age, the first unit of a new design takes 600 hours. Direct labor is paid $25 per hour.
Required:1. Set up a table with columns showing: the cumulative number of units, cumulative average time per unit in hours, and cumulative total time in hours. Show results by row for total pro-duction of one unit, two units, four units, eight units, and sixteen units. (Round hour answers to two significant digits.)
2. What is the total labor cost if Bordner makes the following number of units: one, four, sixteen? What is the average cost per system for the following number of systems: one, four, or sixteen? (Round your answers to the nearest dollar.)
3. Using the logarithmic function, set up a table with columns showing: the cumulative number of units, cumulative average time per unit in hours,…
Chapter 3 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 3 - Why is knowledge of cost behavior important for...Ch. 3 - How does the length of the time horizon affect the...Ch. 3 - Prob. 3DQCh. 3 - What is the relationship between flexible...Ch. 3 - What is the relationship between committed...Ch. 3 - Describe the difference between a variable cost...Ch. 3 - Why do mixed costs pose a problem when it comes to...Ch. 3 - Why is a scattergraph a good first step in...Ch. 3 - What are the advantages of the scatterplot method...Ch. 3 - Prob. 10DQ
Ch. 3 - What is meant by the best-fitting line? Is the...Ch. 3 - When is multiple regression required to explain...Ch. 3 - Explain the meaning of the learning curve. How do...Ch. 3 - Assume you are the manager responsible for...Ch. 3 - Some firms assign mixed costs to either the fixed...Ch. 3 - Callies Gym is a complete fitness center. Owner...Ch. 3 - Corazon Manufacturing Company has a purchasing...Ch. 3 - Darnell Poston, owner of Poston Manufacturing,...Ch. 3 - Dohini Manufacturing Company had the following 12...Ch. 3 - Refer to Cornerstone Exercise 3.4 for data on...Ch. 3 - The controller for Dohini Manufacturing Company...Ch. 3 - Prob. 7CECh. 3 - State Universitys football team just received a...Ch. 3 - Classify the following costs of activity inputs as...Ch. 3 - SmokeCity, Inc., manufactures barbeque smokers....Ch. 3 - Cashion Company produces chemical mixtures for...Ch. 3 - For the following activities and their associated...Ch. 3 - Prob. 13ECh. 3 - Vargas, Inc., produces industrial machinery....Ch. 3 - Penny Davis runs the Shear Beauty Salon near a...Ch. 3 - Shirrell Blackthorn is the accountant for several...Ch. 3 - Deepa Dalal opened a free-standing radiology...Ch. 3 - Prob. 18ECh. 3 - The controller of the South Charleston plant of...Ch. 3 - Lassiter Company used the method of least squares...Ch. 3 - Sweet Dreams Bakery was started five years ago by...Ch. 3 - Ginnian and Fitch, a regional accounting firm,...Ch. 3 - Bordner Company manufactures HVAC (heating,...Ch. 3 - Sharon Glessing, controller for Janson Company,...Ch. 3 - The graphs below represent cost behavior patterns...Ch. 3 - Starling Co. manufactures one product with a...Ch. 3 - Alard Manufacturing Company has a billing...Ch. 3 - Prob. 28ECh. 3 - Prob. 29ECh. 3 - Natur-Gro, Inc., manufactures composters. Based on...Ch. 3 - Rolertyme Company manufactures roller skates. With...Ch. 3 - St. Teresas Medical Center (STMC) offers a number...Ch. 3 - Big Mikes, a large hardware store, has gathered...Ch. 3 - Kimball Company has developed the following cost...Ch. 3 - The management of Wheeler Company has decided to...Ch. 3 - DeMarco Company is developing a cost formula for...Ch. 3 - Weber Valley Regional Hospital has collected data...Ch. 3 - Friendly Bank is attempting to determine the cost...Ch. 3 - Randy Harris, controller, has been given the...Ch. 3 - The Lockit Company manufactures door knobs for...Ch. 3 - Harriman Industries manufactures engines for the...Ch. 3 - Thames Assurance Company sells a variety of life...
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