Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 17
Exercise 17-6 Plantwide overhead rate L.O. P1
[The following information applies to the questions displayed below.]
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Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow.
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|
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Molding
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Trimming
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||||||||
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Direct labor hours
|
|
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52,000
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DLH
|
|
|
|
48,000
|
DLH
|
|
|
Machine hours
|
|
|
30,500
|
MH
|
|
|
|
3,600
|
MH
|
|
|
Overhead costs
|
|
$
|
730,000
|
|
|
|
$
|
590,000
|
|
|
|
Data for two special order parts to be manufactured by the company in 2011 follow:
|
|
|
Part A27C
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Part X82B
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||||||
|
Number of units
|
|
9,800
|
units
|
|
|
54,500
|
units
|
|
|
Machine hours
|
|
|
|
|
|
|
|
|
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Molding
|
|
5,100
|
MH
|
|
|
1,020
|
MH
|
|
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Trimming
|
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2,600
|
MH
|
|
|
650
|
MH
|
|
|
Direct labor hours
|
|
|
|
|
|
|
|
|
|
Molding
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5,500
|
DLH
|
2,150
|
DLH
|
||||
|
Trimming
|
700
|
DLH
|
3,500
|
DLH
|
||||
1.Exercise 17-6 Part 1
|
Required
|
|
|
1.
|
Compute the plantwide overhead rate using direct labor hours as the base. (Round your answer to 2 decimal places. Omit the “$” sign in your response.)
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|
Plantwide overhead rate
|
rev: 03-04-11
2.
Exercise 17-6 Part 2
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2.
|
Determine the overhead cost assigned to each product line using the plantwide rate computed in part 1.(Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.)
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Product
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Overhead cost
|
|
Part A27C
|
|
|
Part X82B
|
|
3.
Exercise 17-7 Departmental overhead rates L.O. P2
|
Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow.
|
|
|
Molding
|
Trimming
|
||||||||
|
Direct labor hours
|
|
|
52,000
|
DLH
|
|
|
|
48,000
|
DLH
|
|
|
Machine hours
|
|
|
30,500
|
MH
|
|
|
|
3,600
|
MH
|
|
|
Overhead costs
|
|
$
|
730,000
|
|
|
|
$
|
590,000
|
|
|
|
Data for two special order parts to be manufactured by the company in 2011 follow:
|
|
|
Part A27C
|
Part X82B
|
||||||
|
Number of units
|
|
9,800
|
units
|
|
|
54,500
|
units
|
|
|
Machine hours
|
|
|
|
|
|
|
|
|
|
Molding
|
|
5,100
|
MH
|
|
|
1,020
|
MH
|
|
|
Trimming
|
|
2,600
|
MH
|
|
|
650
|
MH
|
|
|
Direct labor hours
|
|
|
|
|
|
|
|
|
|
Molding
|
|
5,500
|
DLH
|
|
|
2,150
|
DLH
|
|
|
Trimming
|
|
700
|
DLH
|
|
|
3,500
|
DLH
|
|
|
Required
|
|
|
1.
|
Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
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Department
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Overhead rate
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Molding
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|
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Trimming
|
|
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2.
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Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1. (Round your intermediate calculations to 2 decimal places and final answers to whole dollar amount. Omit the “$” sign in your response.)
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Product
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Molding
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Trimming
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Total overhead
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Part A27C
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|
|
|
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Part X82B
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|
|
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3.
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Determine the overhead cost per unit for each product line using the departmental rate.. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
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Product
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Overhead cost
|
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Part A27C
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|
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Part X82B
|
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4.
Exercise 17-9 Using the plantwide Overhead rate to assess prices L.O. A1, P1
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Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.
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Process
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Activity
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Overhead Cost
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Driver
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Quantity
|
|||
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Components
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Changeover
|
|
$
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500,000
|
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Number of batches
|
800
|
|
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Machining
|
|
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279,000
|
|
Machine hours
|
6,000
|
|
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Setups
|
|
|
225,000
|
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Number of setups
|
120
|
|
|
|
|
|
|
|
||
|
|
|
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$
|
1,004,000
|
|
|
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Finishing
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Welding
|
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$
|
180,300
|
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Welding hours
|
3,000
|
|
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Inspecting
|
|
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210,000
|
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Number of inspections
|
700
|
|
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Rework
|
|
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75,000
|
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Rework orders
|
300
|
|
|
|
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|
|
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||
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|
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$
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465,300
|
|
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Support
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Purchasing
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$
|
135,000
|
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Purchase orders
|
450
|
|
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Providing space
|
|
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32,000
|
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Number of units
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5,000
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Providing utilities
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65,000
|
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Number of units
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5,000
|
|
|
|
|
|
|
|
||
|
|
|
|
$
|
232,000
|
|
|
|
|
|
|
|
|
|
|
||
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Additional production information concerning its two product lines follows.
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Model 145
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Model 212
|
||||
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Units produced
|
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1,500
|
|
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3,500
|
|
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Welding hours
|
|
800
|
|
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2,200
|
|
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Batches
|
|
400
|
|
|
400
|
|
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Number of inspections
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|
400
|
|
|
300
|
|
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Machine hours
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1,800
|
|
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4,200
|
|
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Setups
|
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60
|
|
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60
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|
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Rework orders
|
|
160
|
|
|
140
|
|
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Purchase orders
|
|
300
|
|
|
150
|
|
|
Required
|
|
|
1.
|
Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “$” sign in your response.)
|
|
Product
|
Overhead cost
|
|
Model 145
|
|
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Model 212
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|
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2.
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Determine the total cost per unit for each products line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. (Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.)
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Product
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Total cost
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Model 145
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|
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Model 212
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|
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3.
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Assume if the market price for Model 145 is $800 and the market price for Model 212 is $470, determine the profit or loss per unit for each model. (Input all amounts as positive values. Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.)
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|
|
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Model 145
|
|
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Model 212
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|
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rev: 03-04-11
5.
Exercise 17-13 Using ABC for strategic decisions L.O. P1, P3
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Consider the following data for two products of Rowena Manufacturing.
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Product A
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Product B
|
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Number of units produced
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10,000 units
|
2,000 units
|
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Direct labor cost(@$24 per DLH)
|
0.20 DLH per unit
|
0.25 DLH per unit
|
|
Direct materials cost
|
$ 2 per unit
|
$ 3 per unit
|
|
Activity
|
Overhead costs
|
|||
|
Machine setup
|
|
$
|
121,000
|
|
|
Materials handling
|
|
|
48,000
|
|
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Quality control
|
|
|
80,000
|
|
|
|
|
|
||
|
|
|
$
|
249,000
|
|
|
|
|
|
||
|
Required
|
|
|
1.
|
Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
|
|
|
Product A
|
Product B
|
|
Manufacturing cost per unit
|
|
|
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2.
|
Assume if the market price for Product A is $20 and the market price for Product B is $60, determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Omit the “$” sign in your response. Input all amounts as positive values.)
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|
|
|
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Product A
|
|
|
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Product B
|
|
|
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3.
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Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B? (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
|
|
|
Product A
|
Product B
|
|
Number of setups required for production
|
10 setups
|
12 setups
|
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Number of parts required
|
1 part / unit
|
3 parts / unit
|
|
Inspection hours required
|
40 hours
|
210 hours
|
|
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Product A
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Product B
|
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Manufacturing cost per unit
|
|
|
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4.1
|
Determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)
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Product A
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Product B
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Problem 17-1A Evaluating product line costs and prices using ABC L.O. P3
[The following information applies to the questions displayed below.]
|
Healthy Day Company produces two beverages, PowerPunch and SlimLife. Data about these productsfollow.
|
|
|
PowerPunch
|
SlimLife
|
||
|
Production volume
|
12,500
|
bottles
|
180,000
|
bottles
|
|
Liquid materials
|
1,400
|
gallons
|
37,000
|
gallons
|
|
Dry materials
|
620
|
pounds
|
12,000
|
pounds
|
|
Bottles
|
12,500
|
bottles
|
180,000
|
bottles
|
|
Labels
|
3
|
labels per bottle
|
1
|
label per bottle
|
|
Machine setups
|
500
|
setups
|
300
|
setups
|
|
Machine hours
|
200
|
MH
|
3,750
|
MH
|
|
Additional data from its two production departments follow.
|
|
Department
|
Driver
|
Cost
|
|||
|
Mixing department
|
|
|
|
|
|
|
Liquid materials
|
Gallons
|
|
$
|
2,304
|
|
|
Dry materials
|
Pounds
|
|
|
6,941
|
|
|
Utilities
|
Machine hours
|
|
|
1,422
|
|
|
Bottling department
|
|
|
|
|
|
|
Bottles
|
Units
|
|
$
|
77,000
|
|
|
Labeling
|
Labels per bottle
|
|
|
6,525
|
|
|
Machine setup
|
Setups
|
|
|
20,000
|
|
7.
Problem 17-1A Part 2
|
2.
|
What is the cost per bottle for PowerPunch and SlimLife? (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the “$” sign in your response.)
|
|
|
PowerPunch
|
SlimLife
|
||
|
Average cost per bottle
|
|
|
|
|
9.
Problem 17-1A Part 4
|
4.
|
What is the minimum price that the company should set per bottle of SlimLife?
|
|
|
$0.53 per bottle
|
|
|
$0.86 per bottle
|
|
|
$0.36 per bottle
|
|
The price of SlimLife must cover the costs associated with the product, so the minimum price for this product is $0.53 / bottle.
|
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