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Jack and Jill Manufacturing Inc. began the year with the following.
Units |
||
Beginning work-in-process |
15,000 |
30% complete |
Transferred to finished goods |
55,000 |
|
Ending inventory |
5,000 |
60% complete |
Materials added at the beginning of the process. |
Required: Calculate the equivalent units for the following. |
a. Materials costs under the weighted average process cost method |
b. Conversion costs under the weighted average process cost method |
c. Materials costs under the FIFO process cost method |
d. Conversion costs under the FIFO process cost method |
3. (TCO 8) Bones Company manufactures two products (X and Z).
Overhead costs have been divided into three cost pools that use the following activity drivers. |
Product |
# of Setups |
Machine Hours |
Packing Orders |
X |
24 |
1,300 |
75 |
Z |
24 |
3,900 |
225 |
Cost per Pool |
$60,000 |
$150,000 |
$30,000 |
a. What is the allocation rate for Product Z per setup using activity-based costing? |
b. What is the allocation rate for Product Z per machine hours using activity-based costing? |
c. What is the allocation rate for Product Z per packing order using activity-based costing? |
4. (TCO 8) Household Manufacturing Inc. sells its product for $80 each.
Sales volume averages 10,000 units per year. |
Recently, its main competitor reduced the price of its product to $68. |
Maximum expects sales to drop dramatically unless it matches the competitor’s price. |
In addition, the current profit per unit must be maintained. |
Information about the product (for production of 10,000) is as follows. |
Standard Quantity |
Actual Quantity |
Actual Cost |
|
Materials (pounds) |
2,400 |
2,500 |
$50,000 |
Labor (hours) |
600 |
750 |
$22,500 |
Setups (hours) |
0 |
150 |
$4,500 |
Material handling (moves) |
0 |
500 |
$4,000 |
Warranties (number repaired) |
0 |
300 |
$21,000 |
Required: |
a. Calculate the target cost for maintaining current market share and profitability. |
b. Calculate the non-value-added cost per unit. |
c. If non-value-added costs can be reduced to zero, can the target cost be achieved? |
(Points : 40)
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