Superchip specializes in the manufacture of ball bearings for aircraft. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectable before inspection of finished goods. Normally, the spoiled units are 15% of the good units transferred out. Spoiled units are disposed of at zero net disposal price. Superchip uses the FIFO method of process costing. Summary data for September 2018 are: (Click the icon to view the data.) Required 1. For each cost element, compute the equivalent units. Show physical units in the first column. 2. For each cost element, calculate the cost per equivalent unit. 3. Summarize total costs to account for, and assign these costs to units completed and transferred out (to normal spoilage), to abnormal spoilage, and to units in ending work in process. Requirement 1. For each cost element, compute the equivalent units. Show physical units in the first column. Enter the physical units in first, and then calculate the equivalent units. (Round your answers to the nearest whole unit.) Flow of Production Work in process, beginning Started during current period. To account for Completed and transferred out during current period: From beginning work in process Started and completed Normal spoilage Abnormal spoilage Work in process, ending Accounted for Work done in current period only Physical Units Data table Physical Units (ball bearings) Work-in-process, September 1" 400 Direct Conversion Materials $76,800 Costs $12,240 Started during September 2018 3,000 Good units completed and transferred out during September 2018 1,400 Work-in-process, September 30 300 Costs added during September 2018 $453,600 $184,320 "Degree of completion: direct materials, 100%; conversion costs, 30%. "Degree of completion: direct materials, 100%; conversion costs, 40%. Print Done - Clear all Check answer The Walking Shoe Company operates a chain of shoe stores. The stores sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes. Each store has a store manager who is paid a fixed salary. Individual salespeople receive a fixed salary and a sales commission. Walking is trying to determine the desirability of opening another store which is expected to have the following revenue and cost relationships. (Click the icon to view the revenue and cost information.) Note that if sales commissions were discontinued for individual salespeople, there would be an $89,000 increase in fixed salaries. Required Requirement 1. Calculate the number of units sold where the operating income under (a) a fixed-salary plan and (b) a lower fixed-salary-and-commission plan (for salespeople only) would be equal. Above that number of units sold, one plan would be more profitable than the other; below that number of units sold, the reverse would occur. (Round your answer up to the nearest whole unit.) The number of units sold where the operating income under both plans would be equal is Revenue and cost information Selling price Unit variable cost per pair: $ 36.00 Cost of shoes 18.00 1.80 Sales commissions Total variable costs $ 19.80 Annual fixed costs: Rent $ 67,000 Salaries 202,000 Advertising 88,000 Other fixed costs 29,000 $ 384,000 Total fixed costs Print Done Clear all Final check The Pacific Boat Company, which is under contract to the Navy, assembles troop deployment boats. As part of its research program, it completes the assembly of the first of a new model (PT109) of deployment boats. The Navy is impressed with the PT109. It requests that Pacific Boat submit a proposal on the cost of producing another six PT109s. Pacific Boat reports the following cost information for the first PT109 assembled and uses a 90% cumulative average-time learning model as a basis for forecasting direct manufacturing labour-hours for the next six PT109s. (A 90% learning curve means b = -0.152004.) (Click the icon to view the cost information.) Required The total cumulative ume in labour-hours for seven PITUSSIS PT1098 is 61,852 hours. nours, unererure, une sa urne to produce six Now calculate the predicted total costs of producing the six PT109s. (Round your answers to the nearest whole dollar.) Direct materials $ 1,194,000 Direct manufacturing labour 2,597,784 Variable manufacturing overhead 1,608,152 Other manufacturing overhead Total costs 519,557 5,919,493 Requirement 2. What is the dollar amount of the difference between (a) the predicted total costs for producing the six PT109s in requirement 1, and (b) the predicted total costs for producing the six PT109s, assuming that there is no leaming curve for direct manufacturing labour? That is, for (b) assume a linear function for units produced and direct manufacturing lab Begin by calculating the predicted total costs for producing the six PT109s, assuming that there is no learning curve for di Direct materials Cost information Direct manufacturing labour 1,194,000 3,704,400 Variable manufacturing overhead 2,293,200 740,880 7,932,480 Other manufacturing overhead Total costs The difference between (a) requirement 1's predicted total costs and (b) predicted total costs with no learning curve is $ Direct material cost $199,000 Direct manufacturing labour time for first boat Direct manufacturing labour rate 14,700 labour-hours Variable manufacturing overhead cost $42 per direct manufacturing labour-hour $26 per direct manufacturing labour-hour 20% of direct manufacturing labour costs $279,000 Other manufacturing overhead Tooling costs Learning curve for manufacturing labour time per boat 90% cumulative average time a Tooling can be reused at no extra cost because all of its cost has been assigned to the first deployment boat. In 0.90 b Using the formula for a 90% learning curve, b = In 2 = -0.105361 0.693147 =-0.152004 - X The TechMech Company produces and sells 6,000 modular computer desks per year at a selling price of $500 each. Its current production equipment, purchased for $1,500,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $600,000. However, the emergence of a new molding technology has led TechMech to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: (Click icon to view the data.) Requirements 1. Should TechMech upgrade its production line or replace it? Show your calculations. (Only complete the necessary answer boxes.) Cash operating costs Current disposal price One time capital costs, written off periodically as depreciation Total relevant costs Over 3 years Upgrade Difference Replace in favour of Replace Data table One-time equipment costs Variable manufacturing cost per desk Upgrade $ 2,700,000 $ Replace $ 4,200,000 140 $ 80 Remaining useful life of equipment (years) 3 3 Terminal disposal value of equipment All equipment costs will continue to be depreciated on a straight-line basis. For simplicity, ignore income taxes and the time value of money. Print Done Clear all Check