Managerial 13e Ch 12 HW

Managerial 13e Ch 12 HW - Cost Accounting 13 edition...

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Cost Accounting 13 edition CHAPTER 12 18, 19, 23, 26, 32, 34, and 37 Not on My Accounting Lab 12-18 Short-run pricing, capacity constraints. 1. Per kilogram of hard cheese: Milk (10 liters $1.50 per liter) $15 Direct manufacturing labor 5 Variable manufacturing overhead 3 Fixed manufacturing cost allocated 6 Total manufacturing cost $29 If Vermont Hills can get all the Holstein milk it needs, and has sufficient production capacity, then, the minimum price per kilo it should charge for the hard cheese is the variable cost per kilo = $15+5+3 = $23 per kilo. 2. If milk is in short supply, then each kilo of hard cheese displaces 2.5 kilos of soft cheese (10 liters of milk per kilo of hard cheese versus 4 liters of milk per kilo of soft cheese). Then, for the hard cheese, the minimum price Vermont should charge is the variable cost per kilo of hard cheese plus the contribution margin from 2.5 kilos of soft cheese, or, $23 + (2.5 $8 per kilo) = $43 per kilo That is, if milk is in short supply, Vermont should not agree to produce any hard cheese unless the buyer is willing to pay at least $43 per kilo.
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12-19 Value-added, nonvalue-added costs. 1. Category Examples Value-added costs a. Materials and labor for regular repairs $ 800,000 Nonvalue-added costs b. Rework costs c. Expediting costs caused by work delays g. Breakdown maintenance of equipment Total $ 75,000 60,000 55,000 $190,000 Gray area d. Materials handling costs e. Materials procurement and inspection costs f. Preventive maintenance of equipment Total $ 50,000 35,000 15,000 $100,000 Classifications of value-added, nonvalue-added, and gray area costs are often not clear-cut. Other classifications of some of the cost categories are also plausible. For example, some students may include materials handling, materials procurement, and inspection costs and preventive maintenance as value-added costs (costs that customers perceive as adding value and as being necessary for good repair service) rather than as in the gray area. Preventive maintenance, for instance, might be regarded as value-added because it helps prevent nonvalue- adding breakdown maintenance. 2. Total costs in the gray area are $100,000. Of this, we assume 65%, or $65,000, are value- added and 35%, or $35,000, are nonvalue-added. Total value-added costs: $800,000 + $65,000 $ 865,000 Total nonvalue-added costs: $190,000 + $35,000 225,000 Total costs $1,090,000 Nonvalue-added costs are $225,000 ÷ $1,090,000 = 20.64% of total costs. Value-added costs are $865,000 ÷ $1,090,000 = 79.36% of total costs. 3. Effect on Costs Classified as Program Value-Added Nonvalue- Added Gray Area (a) Quality improvement programs to reduce rework costs by 75% (0.75 × $75,000) reduce expediting costs by 75% (0.75 × $60,000) reduce materials and labor costs by 5% (0.05 × $800,000) Total effect –$ 40,000 –$ 40,000 –$56,250 45,000 –$101,250
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(b) Working with suppliers to reduce materials procurement and inspection costs by
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Managerial 13e Ch 12 HW - Cost Accounting 13 edition...

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