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Q.Calculate the following in a suitable report format (Use schedules to show your calculations): a. Total manufacturing cost per box for each product using planned
Q.Calculate the following in a suitable report format (Use schedules to show your calculations):
a. Total manufacturing cost per box for each product using planned production as the allocation base;
b. Total manufacturing cost per box for each product using the total of direct material and direct labour costs as the allocation base
Carina Ltd. is a subsidiary of MY Group, a large manufacturer of glass products headquartered in Europe. Although originally established as an industrial-glass producer, Carina reinvented itself after the Second World War as a producer of fine glass and crystal ware, including tableware and other similar products. The company enjoys an international reputation as a high quality producer of glass at affordable prices owing to the skills of its master craftsmen, as well as the application of innovative technology in the manufacturing process. Carina-ware is used in fine restaurants, hotels, and residences throughout the world. Several years ago, management at Carina Ltd. recognised that growth in the glass tableware market was beginning to slow, forcing the company to search for other growth opportunities. After extensive research, management concluded that expanding into glass ornaments would allow the company not only to continue to grow, but also to take advantage of Carina Ltd.'s unique capabilities and capitalise on its high quality reputation and innovative technology. The company started Carina and leased a small manufacturing facility in Australia. Carina produces three products at this manufacturing facility: small glass ornaments, large glass ornaments, and specialty glass ornaments. Some basic information about the three products is provided in Table 1 Table 1: Product Information Number of ornaments (Planned Production) 840,000 600,000 200,000 Product Ornaments per Box 12 6 Selling Price per Box Small coloured glass Large coloured glass Specialty ornaments AS 9.00 AS 11.00 AS 17.00 Costing at Carina Currently, the sales department sets Carina's prices for the three products after benchmarking against the prices of similar products available in the marketplace. The General Manager of Carina, Matt Smith, wonders if the prices set are sufficient to ensure that the individual product lines are profitable. He thinks that the company needs to prepare an analysis of unit-product costs for each of Carina's three products. He thinks this might be helpful in determining whether any adjustments in the product prices are warranted. Matt's nephew, Garry, is currently gaining work experience as an intern at Carina. Garry's long term ambition is to be an accountant and has attended a few book-keeping courses while finishing high school. Matt thinks that this is a great opportunity for Garry to learn about cost accounting and asks him to collect as much information as he can about the manufacturing processes and costs at the companyStep by Step Solution
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