(a)
Constraints:
In order to achieve the goals of the company, a specific approach is used to identify and manage the constraints is known as the theory of constraints. In this theory of constraints, the company must recognize its constraints and discover ways to eradicate them wherever appropriate.
To Determine: The single product, which Industries T should produce.
(b)
Contribution Margin:
The process or theory, which is used to judge the benefit given by each unit of the goods produced, is called as contribution margin.
To Determine: The contribution margin per unit of limited resource for each product.
(c)
Contribution Margin:
The process or theory, which is used to judge the benefit given by each unit of the goods produced, is called as contribution margin.
To Identify: The way in which the additional time should be used, if additional machine time could be obtained.
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Managerial Accounting: Tools for Business Decision Making
- The Jabba Corporation manufactures the "Snack Buster" which consists of a wooden snack chip bowl with an attached porcelain dip bowl. Which of the following would be relevant in Jabba's decision to make the dip bowls or buy them from an outside supplier?   Fixed overhead cost that can be eliminated if the bowls are purchased from the outside supplier The variable selling cost of the Snack Buster A) Yes Yes B) Yes No C) No Yes D) No No  Multiple Choice Choice A Choice B Choice C Choice Darrow_forwardHomework i s w Asbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial. The Personal grinders have a smaller capacity and are less durable than the Commercial grinders. ACE only recently began producing the Commercial model. Since the introduction of the new product, profits have been steadily declining, although sales have been increasing. The management at ACE believes that the problem might be in how the accounting system allocates costs to products. Direct materials. Direct labor The current system at ACE allocates manufacturing overhead to products based on direct labor costs. For the most recent year, which is representative, manufacturing overhead totaled $2,023,500 based on production of 30,000 Personal grinders and 10,000 Commercial grinders. Direct costs were as follows: Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead here to search CINNAMON Management has determined that…arrow_forwardAs a general rule of​ economics, companies should only produce and sell units as long as​ ________.  A. the revenue from an additional unit exceeds the cost of producing it  B. there is customer demand for the product  C. there is a relatively small supply of the product when compared to past operating periods  D. there is a generous supply of​ low-cost direct materialsarrow_forward
- One type of speaker is complex to make and is produced in many batches, whereas another one is simple to make and produced in few batches. Teledor needs the same number of machine hours to make each type of speaker and it allocates all overhead costs using machine hours basis.  (a) Could you identify if the speakers would be miscosted? Briefly explain why?  (b) How is the cost hierarchy helpful to Teledor in managing its business?arrow_forwardRequirement 2. Consider two types of elliptical machines made by Roberta​, Inc. One​ machine, designed for professional​ use, is complex to make and is produced in many batches. The other machine is simple to make and is produced in few batches. Suppose that Roberta needs the same number of​ machine-hours to make each type of elliptical machine and that Roberta allocates all overhead costs using​ machine-hours as the only allocation base.​ How, if at​ all, would the machines be​ miscosted? Briefly explain why.  The complex elliptical machine made in ▼  few many batches will use ▼  significantly less significantly more the same ​batch-level overhead resources compared to the simple elliptical machine that is made in ▼  few many batches. In​ addition, the complex machine will use ▼  less more ▼  facility-sustaining product-sustaining overhead resources because it is complex. Because ▼  each elliptical machine requires the same amount of…arrow_forwardplease explain why the option is false and other options true in detail with full explanation Sing Manufacturing Company is considering an opportunity to outsource a four functioncalculator that the Company currently makes and sales. Even if the calculator is outsourced,Sing plans to continue to sell it. Also, Sing plans to continue production on other calculatormodels that are currently being made by the Company. The costs associated with making thefour function calculators include unit-level materials, labor, and overhead. In addition, thereis some facility-level overhead costs that are allocated to the product. Sing pays a 5% salcscommission on each calculator sold. Based on this information, indicate which of thefollowing statements is false.a. The materials cost is relevant to the outsourcing decision.b. The facility-level overhead cost is not relevant to the outsourcing decision.C. The sales commission is relevant to the outsourcing decision.d. It may be wise for Sing to…arrow_forward
- Please solve this MCQs A company which manufactures custom-made machinery routinely incurs sizable telephone costs in the process of taking sales orders from customers. Which of the following is a proper classification of this cost?   Period cost   Conversion cost   Product cost   Prime costarrow_forwardThat is, it is unacceptable to manually compute the solutions and simply insert the answers into the cells of an excel spreadsheet.) Raiders Ltd CVP Problem Prepare an Excel worksheet that illustrates cost-volume-profit (CVP) analysis, also referred to as breakeven analysis. Assume that a particular product sold at Raiders Ltd a US based toy company has a sales price per unit of $4.00; variable cost per unit of $2.20; and total fixed cost of $100,000. Task 1) Calculate the contribution margin per unit, the break-even point in units of sales, and the break-even point in dollars of sales. In the inputarea, show sales price per unit, variable cost per unit, and total fixed cost. In the output area, show contribution margin per unit, breakeven point in units, and breakeven point in dollars computed using appropriate formulas. Task 2) Assume that the planning team at Raiders Ltd estimates that for the next planning period selling price for this product will increase 50%; variable expenses…arrow_forwardSouthward Company has implemented a JIT flexible manufacturing system. John Richins, controller of the company, has decided to reduce the accounting requirements given the expectation of lower inventories. For one thing, he has decided to treat direct labor cost as a part of overhead and to discontinue the detailed direct labor accounting of the past. The company has created two manufacturing cells, each capable of producing a family of products: the radiator cell and the water pump cell. The output of both cells is sold to a sister division and to customers who use the radiators and water pumps for repair activity. Product-level overhead costs outside the cells are assigned to each cell using appropriate drivers. Facility-level costs are allocated to each cell on the basis of square footage. The budgeted direct labor and overhead costs are as follows: The predetermined conversion cost rate is based on available production hours in each cell. The radiator cell has 45,000 hours available for production, and the water pump cell has 27,000 hours. Conversion costs are applied to the units produced by multiplying the conversion rate by the actual time required to produce the units. The radiator cell produced 81,000 units, taking 0.5 hour to produce one unit of product (on average). The water pump cell produced 90,000 units, taking 0.25 hour to produce one unit of product (on average). Other actual results for the year are as follows: All units produced were sold. Any conversion cost variance is closed to Cost of Goods Sold. Required: 1. Calculate the predetermined conversion cost rates for each cell. 2. Prepare journal entries using backflush accounting. Assume two trigger points, with completion of goods as the second trigger point. 3. Repeat Requirement 2, assuming that the second trigger point is the sale of the goods. 4. Explain why there is no need to have a work-in-process inventory account. 5. Two variants of backflush costing were presented in which each used two trigger points, with the second trigger point differing. Suppose that the only trigger point for recognizing manufacturing costs occurs when the goods are sold. How would the entries be listed here? When would this backflush variant be considered appropriate?arrow_forward
- Consider the following situation. Tricon Piping Systems manufactures small diameter potable polyethylene water pipe and achieves distribution primarily through plumbing wholesalers. The firm also sells directly to large construction companies, often creating friction with the plumbing wholesalers. Because there are several manufacturers who produce to the same specifications, price competition is often intense. The salesperson for Tricon recently offered a price concession to capture an order. Here are the specifics. The salesperson bid a job at $14,275 (list price). Tricon endeavors to sell at list price, and enjoys a 42% gross margin on the pipe in question at list price. In order to gain the "business" and to secure her commission, the salesperson offered the customer a 14% price discount. Calculate the percent change (+/-) in gross margin. Report your answer as a percentage and round to the nearest percent.arrow_forwardAsbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial. The Personal grinders have a smaller capacity and are less durable than the Commercial grinders. ACE only recently began producing the Commercial model. Since the Introduction of the new product, profits have been steadily declining, although sales have been increasing. The management at ACE belleves that the problem might be in how the accounting system allocates costs to products. The current system at ACE allocates manufacturing overhead to products based on direct labor costs. For the most recent year, which Is representative, manufacturing overhead totaled $2,091,000 based on production of 30,000 Personal grinders and 10,000 Commercial grinders. Direct costs were as follows: Direct materials Direct labor Personal $ 1,448,200 1,034,000 Commercial $ 661,000 708,500 Total $ 2,109,200 1,742,500 Management has determined that overhead costs are caused by three cost drivers. These…arrow_forwardRefer to the information for Smooth Move Company on the previous page. If SmoothMove accepts the order, no fixed manufacturing activities will be affected because there issufficient excess capacity.Required:1. What are the alternatives for Smooth Move?2. CONCEPTUAL CONNECTION Should Smooth Move accept the special order? By howmuch will profit increase or decrease if the order is accepted?3. CONCEPTUAL CONNECTION Briefly explain the significance of the statement in theexercise that “existing sales will not be affected” (by the special sale).arrow_forward
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning