Accounting Information Systems
10th Edition
ISBN: 9781337619202
Author: Hall, James A.
Publisher: Cengage Learning,
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Chapter 7, Problem 2P
a.
To determine
Determine the economic order quantity.
b.
To determine
Determine the reorder point.
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Roadside Inc. manufactures the Megalite, and is reviewing the product's cost structure. Accounting records show these costs:factory space: $250,000 per yearinsurance: $47,000 per yearsupervisor salaries: $125,000 per yearmaterials: $5.00 per lampdirect labor: $2.69 per lamprecycling charge: $0.37 per lampRoadside Inc sells the Megalite to wholesalers for $13.69 each. Calculate Roadside's contribution margin as percent of selling price on the Megalite. (Rounding: tenth of a percent. Report 25.3%, for example, as "25.3".)
Dixon Robotics manufactures three robot models: the A3B4, the BC11, and the C3PO. Dixon allocates manufacturing overhead to each model based on machine-hours. A large portion of the company’s manufacturing overhead costs is incurred by the Maintenance Department. This year, the department anticipates that it will incur $100,000 in total costs. The following estimates pertain to the upcoming year.
Model
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BC11
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C3PO
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Ed Smith, Dixon’s cost accountant, suspects that unit costs are being distorted by using a single activity base to allocate Maintenance Department costs to products. Thus, he is considering the implementation of activity-based costing (ABC).
Under the proposed ABC method, the costs of the Maintenance Department would be allocated to the following activity cost pools using the number of work orders as an activity base: (1) the repairs pool and (2) the janitorial…
Generators R Us (GRU) is a leading manufacturer of partible electric generators used for emergency power supply in both civil and private disaster situations. Each year it produces 16,000 of its model HI-360 units. This model used two bearings, which the company purchases from an outside vendor. A review of accounting and usage records reveals the following information: labor for installing the bearings = $8 per generator; per-unit cost of bearings = $25; delivery charges per order = $5; processing costs per order = $6; mailing expenses per order = $2; and the estimated cost of carrying one bearing in inventory for the entire year = 35 cents. GRU also found that on average four days elapse between the time an order is placed and the time items are received.
Required
a. Compute the economic order quantity.
b. Compute the reorder point. Assume that the HI-360 model is manufactured for 350 days each year.
Chapter 7 Solutions
Accounting Information Systems
Ch. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Distinguish between continuous, batch, and...Ch. 7 - Prob. 4RQCh. 7 - What are the primary determinants for both...Ch. 7 - What are the objectives of inventory control in...Ch. 7 - Prob. 7RQCh. 7 - What documents are needed for cost accounting...Ch. 7 - What types of management reports are prepared by...Ch. 7 - What document signals the completion of the...
Ch. 7 - Prob. 11RQCh. 7 - Prob. 12RQCh. 7 - Prob. 13RQCh. 7 - What is meant by the statement Inventories...Ch. 7 - What are the primary goals of lean manufacturing?Ch. 7 - Distinguish between activities and cost objects in...Ch. 7 - Differentiate between essential and nonessential...Ch. 7 - Prob. 18RQCh. 7 - Define computer-integrated manufacturing.Ch. 7 - Prob. 20RQCh. 7 - Discuss the importance of the move ticket to the...Ch. 7 - How realistic are the assumptions of the economic...Ch. 7 - Explain why the economic order quantity is the...Ch. 7 - Supervisors in the work centers oversee the usage...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - How does automation help achieve manufacturing...Ch. 7 - Prob. 9DQCh. 7 - How can poor quality be expensive to the firm,...Ch. 7 - Discuss how an emphasis on financial performance...Ch. 7 - Prob. 12DQCh. 7 - How are cost structures fundamentally different...Ch. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Discuss the advantages of activity-based costing.Ch. 7 - Discuss the disadvantages of activity-based...Ch. 7 - Explain why traditional cost allocation methods...Ch. 7 - Explain the concept of a product family and its...Ch. 7 - Explain the relationship between MRP II and ERP.Ch. 7 - Prob. 1MCQCh. 7 - Which of the following is NOT a problem associated...Ch. 7 - Which of the following is NOT a principle of lean...Ch. 7 - Which line segment represents the reorder lead...Ch. 7 - Which line segment represents the demand? a. DE b....Ch. 7 - Which statement describes the evolution of...Ch. 7 - Which of the following statements regarding...Ch. 7 - Refer to the equation for the EOQ in the text. Car...Ch. 7 - DOCUMENT FLOWCHART Prepare a flowchart that...Ch. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - ZERO DEFECTS PROCESS Northern Tractor is a...Ch. 7 - ACTIVITY DRIVERS Cut It Up, Inc., is a...Ch. 7 - LEAN MANUFACTURING PRINCIPLES Write an essay...Ch. 7 - Internal Control Cases UTICA LIGHTING COMPANY...Ch. 7 - LAWN WIZARD INC. (MANUAL SYSTEM WITH STAND-ALONE...Ch. 7 - Prob. 4ICCCh. 7 - Prob. 5ICC
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