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Business Finance

Description

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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Explanation & Answer


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