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chapter-12 - This Accounting Materials are brought to you...

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This Accounting Materials are brought to you by www.everything.freelahat.com CHAPTER 12 QUALTIY-BASED COSTING SYSTEMS AND RELATED MANAGEMENT ACCOUNTING TECHNIQUES [Problem 1] 1. Incremental income from released inventory balance P400,000 x 15% P60,000 Avoided insurance costs P80,000 x 60% 48,000 Sub-lease income 8,000 x 75% x P2.50 15,000 Incremental overtime costs 7,500 x P5.60 (42,000) Lost contribution margin 3,800 x (P22 – P9.50 – P2.50) (38,000 ) Net cash savings using JIT P43,000 2. Factors to be considered before adopting a JIT program a. Unconditional support of the top management. b. Reliability of the internal business processes such as employee skills, machine readiness and usefulness, and plant and operations layout. c. Reliability of the suppliers. d. Decision to continuously improve the entire production process. e. Increase in shareholders’ value. [Problem 2} 1. Incremental income from released inventory funds P600,000 x 20% P120,000 Lost CM Quantity lost 20,000 X UCM USP P12 UVGS P10.8 M / 900,000) (4.50) UVE P900,000 / P900,000 (1.00 ) P 6.50 (130,000) Incremental overtime costs (40,000) Savings from rental 60,000 Rental income from released warehouse space P1.50 x 12,000x 3/4 13,500 Savings from insurance and property tax 14,000 Net savings from JIT system P 37,500 2. a. Support of management. b. Dedication to quality-based environment. c. Availability of resources. d. Understanding and participation of suppliers and customers in the quality-based undertaking. [Problem 3} 1. Learning curve rate = 90% Average DLC/unit (240 units) = P60,000 x 90% x 90% x 90% = P43,740 2. DM P60,000 x 240 units P14,400,000 DL P43,740 x 240 units 10,497,600 VOH P10,497,600 x 60% 6,298,560 Total var mfg. costs P31,196,160 3. DM P 60,000
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This Accounting Materials are brought to you by www.everything.freelahat.com DL P43,740 x 90% 39,366 VOH P39,366 x 60% 23,620 Total var mfg. costs, additional equipment beyond the 240-unit level 122,960 x Cost + Markup rate 125%
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