Chapter 5 A Saved 2 Manchester Technology, Inc., manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 80,000 of the TV boards in 20x1 at a price of $460 per unit. The second high-volume product, a personal computer circuit board, is a recent addition to Manchester's product line. Because the PC board incorporates the latest technology, it can be sold at a premium price. The 20x1 plans include the sale of 55,000 PC boards at $775 per unit. 6.25 points eBook Manchester's management group is meeting to discuss how to spend the sales and promotion dollars for 20x1. The sales manager believes that the market share for the TV board could be expanded by concentrating Manchester's promotional efforts in this area. In response to this suggestion, the production manager said, "Why don't you go after a bigger market for the PC board? The cost sheets that I get show that the contribution from a PC board is significantly larger than the contribution from a TV board. I know we get a premium price for the PC board. Selling it should help overall profitability." C References The cost-accounting system shows that the following costs apply to the PC and TV boards. Direct material Direct labor Machine time PC Board $244 3.0 hr. 1.0 hr. TV Board $154 2.ehr. 0.5 hr. Variable manufacturing overhead is applied on the basis of direct-labor hours. For 20x1, variable overhead is budgeted at $2,465,000, and direct-labor hours are estimated at 357.500. The hourly rates for machine time and direct labor are $28 and $36, respectively. The company applies a material handling charge at 10 percent naterial cost. This material handling charge is not included in variable manufacturing overhead. Total 20x1 expenditures for direct material are budgeted at $25,740,000 Andrew Fulton, Manchester's controller, believes that before the management group proceeds with the discussion about allocating sales and promotional dollars to individual products, it might be worthwhile to look at these products on the basis of the activities involved in their production. Fulton has prepared the following schedule to help the management group understand this concept "Using this information," Fulton explained, "we can calculate an activity-based cost for each TV board and each PC board and then compare it to the standard cost we have been using. The only cost that remains the same for both cost methods is the cost of direct material. The cost drivers will replace the direct labor, machine time, and overhead costs in the old standard cost figures." Budgeted Cost Procurement Production scheduling Packaging and shipping Total Machine setup Hazardous waste disposal ..-14 Cost Driver Number of parts Number of boards Number of boards $ 950,000 515,000 1,030,000 $ 2,495,000 Budgeted Annual Activity for Cost Driver 8,242,000 parts 148,500 boards 148,500 boards $ 952,000 126,000 1 112 Number of setups Pounds of waste banan 803,eee setups 30,360 pounds annan tar MC Chapter 5 A Saved 2 Cost Driver Number of parts Number of boards Number of boards Budgeted Annual Activity for Cost Driver 8,242,000 parts 148,500 boards 148,500 boards 6.25 points Budgeted Cost Procurement Production scheduling Packaging and shipping Total Machine setup Hazardous waste disposal Quality control General supplies Total Machine insertion Manual insertion Wave-soldering Total $ 950,000 515,000 1,030,000 $ 2,495,000 $ 952,000 126,000 1,210,000 177,000 $ 2,465,000 $ 3,150,000 8,242,000 339,000 $12,989,000 Number of setups Pounds of waste Number of inspections Number of boards 803,000 setups 30,360 pounds 209,000 inspections 148,500 boards eBook Number of parts Number of parts Number of boards 5,878,000 parts 2,364,000 parts 148,500 boards o References Required per Unit Parts: Machine insertions Manual insertions Machine setups Hazardous waste disposal, in lb. Inspections PC Board 85 51 34 6 0.40 2 TV Board 41 40 1 5 0.07 1 Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Identify at least four general advantages associated with activity-based costing. (Select "Yes" if the item is a general advantage, and "No" if it is not.) Alle mananamant in fornenn wala added and nonvaloardor arthritiae on that non alio added activitiae can ha Chapter 5 Saved 2 Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 6.25 points Complete this question by entering your answers in the tabs below. eBook um References Required 1 Required 2 Required 3 Identify at least four general advantages associated with activity-based costing. (Select "Yes" if the item is a general advantage, and "No" if it is not.) Yes Yes Allows management to focus on value-added and non-value-added activities, so that non-value-added activities can be controlled or eliminated, thus streamlining production processes Highlights the relationship between activities and identifies opportunities to reduce costs (ie. designing products with fewer parts in order to reduce the cost of them facturing process) Provides management with reports that are easier to interpret because only one manufacturing-overhead cost pool is used per product Provides management with a more thorough understanding of complex product costs and product profitability for improved resource management and pricing decisions Provides a more appropriate means of charging overhead costs to products Requires less resources and is easier to implement than traditional costing systems No Yes "Yes No Requi Required 2 > LR LLIURE 2 Manual insertion Wave-soldering Total 8,242,000 339,000 $12,989,000 UL.. pura Number of parts Number of boards 2,364,000 parts 148,500 boards 6.25 points Required per Unit Parts: Machine insertions Manual insertions Machine setups Hazardous waste disposal, in lb. Inspections PC Board 85 51 34 6 0.40 2 TV Board 41 40 1 5 0.07 eBook References Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. (Round your intermediate calculations to 2 decimal places.) PC Board TV Board Total contribution margin Required per Unit Parts: Machine insertions Manual insertions Machine setups Hazardous waste disposal, in lb. Inspections .PC Board 85 51 34 34 6 0.40 2 TV Board 41 40 1 5 0.07 1 ces Required: 1. Identify at least four general advantages associated with activity-based costing 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. (Round your intermediate calculations to 2 decimal places.) PC Board TV Board Total contribution margin Chapter 5 A Saved 2 Manchester Technology, Inc., manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 80,000 of the TV boards in 20x1 at a price of $460 per unit. The second high-volume product, a personal computer circuit board, is a recent addition to Manchester's product line. Because the PC board incorporates the latest technology, it can be sold at a premium price. The 20x1 plans include the sale of 55,000 PC boards at $775 per unit. 6.25 points eBook Manchester's management group is meeting to discuss how to spend the sales and promotion dollars for 20x1. The sales manager believes that the market share for the TV board could be expanded by concentrating Manchester's promotional efforts in this area. In response to this suggestion, the production manager said, "Why don't you go after a bigger market for the PC board? The cost sheets that I get show that the contribution from a PC board is significantly larger than the contribution from a TV board. I know we get a premium price for the PC board. Selling it should help overall profitability." C References The cost-accounting system shows that the following costs apply to the PC and TV boards. Direct material Direct labor Machine time PC Board $244 3.0 hr. 1.0 hr. TV Board $154 2.ehr. 0.5 hr. Variable manufacturing overhead is applied on the basis of direct-labor hours. For 20x1, variable overhead is budgeted at $2,465,000, and direct-labor hours are estimated at 357.500. The hourly rates for machine time and direct labor are $28 and $36, respectively. The company applies a material handling charge at 10 percent naterial cost. This material handling charge is not included in variable manufacturing overhead. Total 20x1 expenditures for direct material are budgeted at $25,740,000 Andrew Fulton, Manchester's controller, believes that before the management group proceeds with the discussion about allocating sales and promotional dollars to individual products, it might be worthwhile to look at these products on the basis of the activities involved in their production. Fulton has prepared the following schedule to help the management group understand this concept "Using this information," Fulton explained, "we can calculate an activity-based cost for each TV board and each PC board and then compare it to the standard cost we have been using. The only cost that remains the same for both cost methods is the cost of direct material. The cost drivers will replace the direct labor, machine time, and overhead costs in the old standard cost figures." Budgeted Cost Procurement Production scheduling Packaging and shipping Total Machine setup Hazardous waste disposal ..-14 Cost Driver Number of parts Number of boards Number of boards $ 950,000 515,000 1,030,000 $ 2,495,000 Budgeted Annual Activity for Cost Driver 8,242,000 parts 148,500 boards 148,500 boards $ 952,000 126,000 1 112 Number of setups Pounds of waste banan 803,eee setups 30,360 pounds annan tar MC Chapter 5 A Saved 2 Cost Driver Number of parts Number of boards Number of boards Budgeted Annual Activity for Cost Driver 8,242,000 parts 148,500 boards 148,500 boards 6.25 points Budgeted Cost Procurement Production scheduling Packaging and shipping Total Machine setup Hazardous waste disposal Quality control General supplies Total Machine insertion Manual insertion Wave-soldering Total $ 950,000 515,000 1,030,000 $ 2,495,000 $ 952,000 126,000 1,210,000 177,000 $ 2,465,000 $ 3,150,000 8,242,000 339,000 $12,989,000 Number of setups Pounds of waste Number of inspections Number of boards 803,000 setups 30,360 pounds 209,000 inspections 148,500 boards eBook Number of parts Number of parts Number of boards 5,878,000 parts 2,364,000 parts 148,500 boards o References Required per Unit Parts: Machine insertions Manual insertions Machine setups Hazardous waste disposal, in lb. Inspections PC Board 85 51 34 6 0.40 2 TV Board 41 40 1 5 0.07 1 Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Identify at least four general advantages associated with activity-based costing. (Select "Yes" if the item is a general advantage, and "No" if it is not.) Alle mananamant in fornenn wala added and nonvaloardor arthritiae on that non alio added activitiae can ha Chapter 5 Saved 2 Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 6.25 points Complete this question by entering your answers in the tabs below. eBook um References Required 1 Required 2 Required 3 Identify at least four general advantages associated with activity-based costing. (Select "Yes" if the item is a general advantage, and "No" if it is not.) Yes Yes Allows management to focus on value-added and non-value-added activities, so that non-value-added activities can be controlled or eliminated, thus streamlining production processes Highlights the relationship between activities and identifies opportunities to reduce costs (ie. designing products with fewer parts in order to reduce the cost of them facturing process) Provides management with reports that are easier to interpret because only one manufacturing-overhead cost pool is used per product Provides management with a more thorough understanding of complex product costs and product profitability for improved resource management and pricing decisions Provides a more appropriate means of charging overhead costs to products Requires less resources and is easier to implement than traditional costing systems No Yes "Yes No Requi Required 2 > LR LLIURE 2 Manual insertion Wave-soldering Total 8,242,000 339,000 $12,989,000 UL.. pura Number of parts Number of boards 2,364,000 parts 148,500 boards 6.25 points Required per Unit Parts: Machine insertions Manual insertions Machine setups Hazardous waste disposal, in lb. Inspections PC Board 85 51 34 6 0.40 2 TV Board 41 40 1 5 0.07 eBook References Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. (Round your intermediate calculations to 2 decimal places.) PC Board TV Board Total contribution margin Required per Unit Parts: Machine insertions Manual insertions Machine setups Hazardous waste disposal, in lb. Inspections .PC Board 85 51 34 34 6 0.40 2 TV Board 41 40 1 5 0.07 1 ces Required: 1. Identify at least four general advantages associated with activity-based costing 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. (Round your intermediate calculations to 2 decimal places.) PC Board TV Board Total contribution margin