Midterm1 Spr2010

# Compute the overhead allocation rate that sundials

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Unformatted text preview: roduction runs Number of parts handled 31. Compute the overhead allocation rate that SunDial’s current accounting system used. 32. Compute the total manufacturing cost per watch using SunDial’s current accounting system. 6A:002 Spring 2010 – Midterm 1 Page 16 33. SunDial prices watches at 30% over reported manufacturing cost. Compute the selling price per watch when SunDial uses its current accounting system. 34. Compute the Materials Handling allocation rate that SunDial would have used if activity based costing was used in the last fiscal year. 35. Assume that Sundial’s activity allocation rates are: • Production run set-up: \$1,000 per run • Materials Handling: \$0.60 per part Compute the amount of overhead that would be allocated to one watch. 6A:002 Spring 2010 – Midterm 1 Page 17 36. Continue to assume the information given in question 35. Compute the total manufacturing cost per watch when the activity based costing system is used. 37. Based on your analysis, are watches overcosted or undercosted by the current accounting system? 38. Energize Sports Drink spends \$3 on direct materials, direct labor, and variable manufacturing overhead for every unit (a pack of 6 cans) of sports drink it produces. Fixed manufacturing overhead costs are \$3 million per year. The plant, which is currently operating at 80% of capacity, produced 2.0 million units in 2009. Management plans to operate closer to capacity in 2010, producing 2.5 million units. It does not anticipate any changes in the prices it pays for materials, labor, and overhead. Compute the forecasted average product cost for 2010. 6A:002 Spring 2010 – Midterm 1 Page 18 39. Which of the following statements are true? A: Internal failure cost will be higher when work-in-process and finished units are inspected than when they are not inspected. B: JIT production systems tend to increase batch sizes. C: Most firms follow Generally Accepted Costing Principles. D: Firms using JIT production systems generally have shorter manufacturing cycle times. E. Manufacturing firms can lower reported cost per unit by building inventory. 40. Thompson Manufacturing presented the following income statement for 2009. Revenue Cost of Goods Sold Gross Margin Marketing and Administrative Expenses Operating Income \$140,000 100,000 \$40,000 18,000 \$22,000 Thompson believ...
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## This note was uploaded on 09/29/2011 for the course 06A 002 taught by Professor Stuff during the Spring '11 term at University of Iowa.

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