Textbook Assignments - Week 2.docx

Textbook Assignments - Week 2.docx - Exercise 17.15 Spear...

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Exercise 17.15 Spear Custom Furniture uses an activity-based cost accounting system to apply overhead to production. The company maintains four overhead cost pools. The four cost pools, and their budgeted amounts for the upcoming period, are as follows: Maintenance $40,000 Materials handling $20,000 Set-ups $10,000 Quality control $45,000 Four cost drivers are used by Spear to allocate its overhead cost pools to production. The four cost drivers, and their budgeted total levels of activity for the upcoming period, are shown below: Machine hours (to allocate maintenance costs) 600 hours Material moves (to allocate materials handling costs) 400 moves Set-ups (to allocate set-up costs) 100 set-ups Number of inspections (to allocate quality control costs) 300 inspections The company has been asked by Cosmopolitan University to submit a bid for tables to be used in a new computer lab. The plant manager feels that obtaining this job would result in new business in future years. Estimates for the Cosmopolitan University project are as follows: Direct materials $14,000 Direct labor (500 hours) $15,000 Number of machine hours 60 Number of material moves 20 Number of set-ups 4 Number of inspections 2 Question A: Estimate the total cost if manufacturing the tables for Cosmopolitan University Answer for Question A Direct materials $14,000 Direct labor (500 hours) $15,000 Maintenance ($40,000x(60/600)) $4,000 Materials handling ($20,000x20/400)) $1000 Set-ups ($10,000x4/100)) $400 Quality control ($45,000x2/300)) $300 Total Cost $34,700 Question B: Determine the company’s bid price if bids are based upon the total estimated manufacturing cost of a particular project, plus 75% Answer for Question B Spear’s Bid Price ($34,700x75%=$26,025) ($34,700+ $26,025=$60,725) $60,725
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Exercise 18.10 Accessory World makes floor mats for the automobile industry. Finished sets of mats must pass through two departments: Cutting and Coating. Large sheets of synthetic material are cut to size in the Cutting Department and then transferred to the Coating Department, where each set is sprayed with a chemical coating for improved durability. The following information pertains to May activity in the Cutting Department: Cost Data Total cost of beginning inventory on May 1 $44,800 Direct materials costs incurred in May $200,000 Conversion costs incurred in May $87,200 Physical Units Data Units in process, May 1 8,000 sets Units started in May 50,000 sets Units in process, May 31 10,000 sets Percentage of Completion Data Direct materials, May 1 100% Conversion, May 1 80% Direct materials, May 31 100% Conversion, May 31 20% Question A: Prepare a schedule showing: (1) the number of mat sets transferred from the Cutting Department to the Coating Department in May, and (2) the number of mat sets started and completed by the Cutting Department in May. Answer for Question A Work in progress May 1 8,000 Units started in May 50,000 Total units in process for May 58,000 Less: Ending work in process (10,000) Units transferred to the Coating Department 48,000 Less: Work in process May 1 (8,000) Units started and completed in May 40,000
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Question B: Compute the equivalent units of input resources for the Cutting Department in May Answer for Question B Direct Materials Conversion
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