AB F34 F H 3 Question 4: 4 5 6 7 8 acarda Company makes a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
AB F34 F H 3 Question 4: 4 5 6 7 8 acarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit product costs are computed on a quarterly basis by dividing each quarter's manufacturing costs (materials, labour, and overhead) by the quarter's production in units. The company's estimated costs, by quarter, for the coming year are given below: Quarter 9 0 Direct materials Direct labour Manufacturing overhead First $ 240,000 96,000 228,000 Second $ 120,000 Third Fourth 48,000 204,000 $ 60,000 24,000 $ 180,000 Total manufacturing costs $ 564,000 $ 372,000 192,000 $276,000 72,000 216,000 Number of units to be produced 40,000 $ 468,000 60,000 Estimated unit product cost $ 9.30 80,000 $7.05 20,000 $13.80 $7.807 Management finds the variation in unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead, since it is the largest element of cost. Accordingly. you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production. AB F34 F H 3 Question 4: 4 5 6 7 8 acarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit product costs are computed on a quarterly basis by dividing each quarter's manufacturing costs (materials, labour, and overhead) by the quarter's production in units. The company's estimated costs, by quarter, for the coming year are given below: Quarter 9 0 Direct materials Direct labour Manufacturing overhead First $ 240,000 96,000 228,000 Second $ 120,000 Third Fourth 48,000 204,000 $ 60,000 24,000 $ 180,000 Total manufacturing costs $ 564,000 $ 372,000 192,000 $276,000 72,000 216,000 Number of units to be produced 40,000 $ 468,000 60,000 Estimated unit product cost $ 9.30 80,000 $7.05 20,000 $13.80 $7.807 Management finds the variation in unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead, since it is the largest element of cost. Accordingly. you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production.
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
The discovery of the element argon by Lord Rayleigh and Sir William Ramsay had its origins in Rayleigh's measurements of the density of nitrogen with an eye toward accurate determination of its molar...
-
The Conceptual Framework for Financial Reporting 2018 (IFRS Framework 2018) states that the objective of general purpose financial reporting is to provide financial information about the reporting...
-
Ron Sargeant's electric bill from the Longwood Power Authority is shown. If his meter reading for December 17 is 52,344, find the total charges for the December bill. Include all rates and charges as...
-
Which graph represents the function f(x)-- x-2 -10-8-6-4 10- -10-8-8 6 4 1999 91 7 9 9 9 4 6 8 10 x 468 10 2 4 6 8 10
-
A worker eats at a restaurant once a week. He then gets a 25% raise. As a result, he decides to eat out twice as much as before and cut back on the number of frozen pizza he eats from two every week...
-
On January 1, 2024, Baddour, Incorporated, Issued 10%, 12-year bonds with a face amount of $177 million. The bonds were priced at $155 million to yield 12%. Interest is paid semiannually on June 30...
-
2. You decide to use the Endpoints method of linearization to linearize a Type K thermocouple curve between 1000C and 1050. A screen shot of the data points from the www.NIST.gov web site is shown...
-
supermarket order quantity 28. A retail outlet sells a seasonal product for $10 per unit. The cost of the product is $8 per unit. All units not sold during the regular season are sold for half the...
-
1. Define design thinking and explain its six phases. How do you embrace design and innovation-centric culture in totalenergies? 2. List the five phases of growth in small business. List three key...
-
Discuss anything you learned about yourself and how you respond to and manage unpleasant things. Include your experience with trying to lean into the unpleasantness versus trying to avoid or change...
-
7) Suppose that zero interest rates are per annum with continuous compounding are as follows: Maturity (years) Rate (% per annum) 1 2.5 2 3.0 3.5 4 4.2 4.7 Calculate 1-year forward interest rates for...
-
Discuss the application of individual judgement in inventory valuation, e.g. changing the basis of overhead absorption.
-
Explain the criteria to be applied when selecting the method to be used for allocating costs.
-
The following is an extract from the Interbrew 2003 Annual Report: Inventories are valued at the lower of cost and net realisable value. Cost is determined by the weighted average method.The cost of...
Study smarter with the SolutionInn App