Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Costs $ 396,000 2,210,000 Activity Drivers Direct material cost Machine-hours Equipment setup 790,000 Production runs Packaging and shipping 420,000 Units shipped Data for production of the two products at the Bayside plant for the coming year of operations follows: Products LC-20 $ 540,000 $ 420,000 92,125 75 240,000 Total direct material costs Total direct labor costs Total machine-hours Total number of production runs Number of units produced and shipped All direct labor at the Bayside plant is paid $35 per hour. LC-50 $ 180,000 $ 210,000 46,000 50 60,000 Required: .. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? b. What unit product costs will be reported for the two products if the ABC system is used? Required A Required B The intern suggests an ABC system using the cost drivers identified above. What unit product costs will be reported for the two products if the ABC system is used? Note: Do not round intermediate calculations. Direct material costs Direct labor cost Overhead: Material inspection Assembly Equipment setup Packaging and shipping Total costs Number of units Unit cost $ $ LC-20 540,000 $ 420,000 960,000 0 $ LC-50 180,000 210,000 390,000 0 < Required A Required B > Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Costs $ 396,000 2,210,000 Activity Drivers Direct material cost Machine-hours Equipment setup 790,000 Production runs Packaging and shipping 420,000 Units shipped Data for production of the two products at the Bayside plant for the coming year of operations follows: Products LC-20 $ 540,000 $ 420,000 92,125 75 240,000 Total direct material costs Total direct labor costs Total machine-hours Total number of production runs Number of units produced and shipped All direct labor at the Bayside plant is paid $35 per hour. LC-50 $ 180,000 $ 210,000 46,000 50 60,000 Required: .. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? b. What unit product costs will be reported for the two products if the ABC system is used? Required A Required B The intern suggests an ABC system using the cost drivers identified above. What unit product costs will be reported for the two products if the ABC system is used? Note: Do not round intermediate calculations. Direct material costs Direct labor cost Overhead: Material inspection Assembly Equipment setup Packaging and shipping Total costs Number of units Unit cost $ $ LC-20 540,000 $ 420,000 960,000 0 $ LC-50 180,000 210,000 390,000 0 < Required A Required B >
Expert Answer:
Related Book For
Quantitative Methods for Business
ISBN: 978-0324651751
11th Edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam
Posted Date:
Students also viewed these accounting questions
-
The following information applies to the questions displayed below Juan Diego began the year with a tax basis in his partnership interest of $50,000 During the year, he was allocated $20,000 of...
-
The following information applies to the questions displayed below Dower Corporation prepares its financial statements according to IFRS On March 31, 2021, the company purchased equipment for...
-
Required information The following information applies to the questions displayed The following financial statement information is from five separate companies. Required 1. Answer the following...
-
A car of mass m starts from rest and accelerates so that the instantaneous power delivered to the car has a constant magnitude P. The instantaneous velocity of this car is proportional to : (a) t'P 0...
-
Hot air flows from a furnace through a 0.15-m-diameter, thin-walled steel duct with a velocity of 3 m/s. The duct passes through the crawlspace of a house, and its uninsulated exterior surface is...
-
Describe additional types of information that could be collected by the psychologists to help crews better understand their interactions and how they influence crew effectiveness.
-
The Natural Water Company is a processor of mineral water. Sales are made principally in litre bottles to grocery stores throughout the country. The companys income statements for the past year and...
-
The balance in retained earnings on January 1, 2014, for Palmer Inc. was $800,000. During the year, the corporation paid cash dividends of $90,000 and distributed a stock dividend of $8,000. In...
-
Kansas Supplies is a manufacturer of plastic parts that uses the weighted-average process costing method to account for costs of production. It produces parts in three separate departments: Molding,...
-
Consider the following costs for a certain chemical product: Fixed cost: $2.045 million/year. Variable costs: Material cost: 62 cents per gallon of product. Energy cost: 24 cents per gallon of...
-
Find two strictly increasing functions f(n) and g(n) such that f(n) g 0(g(n)) and g(n) g O(f(n)), and both involving only "elementary" operations in their description. For instance, exponentials and...
-
If today it is announced that the interest rate in Australia is being reduced from 4% to 3%, and today it is also announced that the interest rate in the USA is also being reduced from 2% to 1%, what...
-
1. Describe the how IFRS and GAAP are different in the classification, measurement and disclosure of three different areas (financial assets, investment in associates, JVs, business combinations, and...
-
Speedy Auto Repairs uses a job-order costing system. The company's direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics' hourly...
-
In the month of March 2018, an engineer interested in building a plant to obtain a chemical product developed a process by which he obtains from a raw material Z a mixture that contains 85% of...
-
Montana Alta sells two products. Product A and Product B. Product A Product B Total Sales price $40 $50 Variable cost per unit 24 40 Total fixed costs $840,000 Sales price Product A $ 40 and Product...
-
Part 1. A firm's production function is the relationship between: the inputs employed by the firm and the resulting costs of production. the factors of production and the resulting outputs of the...
-
The figure shows a bolted lap joint that uses SAE grade 8 bolts. The members are made of cold-drawn AISI 1040 steel. Find the safe tensile shear load F that can be applied to this connection if the...
-
Vollmer Manufacturing makes three components for sale to refrigeration companies. The components are processed on two machines: a shaper and a grinder. The times (in minutes) required on each machine...
-
If the Albany highway system described in Problem 29 has revised flow capacities as shown in the following network, what is the maximal flow in vehicles per hour through the system? How many vehicles...
-
The Gilbert Air-Conditioning Company is considering the purchase of a special shipment of portable air conditioners manufactured in Japan. Each unit will cost Gilbert $80, and it will be sold for...
-
Which is more costly for an issuer an underwritten deal or a bought deal? Why?
-
Will a shareholder who subscribes a capital increase with a pre-emptive subscription right become poorer if the share price drops after the operation? Why?
-
Which placement procedure carries the most risk for a bank? Why?
Study smarter with the SolutionInn App