Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 17
Exercise 176 Plantwide overhead rate L.O. P1
[The following information applies to the questions displayed below.]
Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow.


Molding

Trimming


Direct labor hours



52,000

DLH




48,000

DLH


Machine hours



30,500

MH




3,600

MH


Overhead costs


$

730,000




$

590,000



Data for two special order parts to be manufactured by the company in 2011 follow:


Part A27C

Part X82B


Number of units


9,800

units



54,500

units


Machine hours









Molding


5,100

MH



1,020

MH


Trimming


2,600

MH



650

MH


Direct labor hours









Molding

5,500

DLH

2,150

DLH


Trimming

700

DLH

3,500

DLH


1.Exercise 176 Part 1
Required


1.

Compute the plantwide overhead rate using direct labor hours as the base. (Round your answer to 2 decimal places. Omit the “$” sign in your response.)

Plantwide overhead rate

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2.
Exercise 176 Part 2
2.

Determine the overhead cost assigned to each product line using the plantwide rate computed in part 1.(Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.)

Product

Overhead cost

Part A27C


Part X82B


3.
Exercise 177 Departmental overhead rates L.O. P2
Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow.


Molding

Trimming


Direct labor hours



52,000

DLH




48,000

DLH


Machine hours



30,500

MH




3,600

MH


Overhead costs


$

730,000




$

590,000



Data for two special order parts to be manufactured by the company in 2011 follow:


Part A27C

Part X82B


Number of units


9,800

units



54,500

units


Machine hours









Molding


5,100

MH



1,020

MH


Trimming


2,600

MH



650

MH


Direct labor hours









Molding


5,500

DLH



2,150

DLH


Trimming


700

DLH



3,500

DLH


Required


1.

Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

Department

Overhead rate

Molding


Trimming


2.

Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1. (Round your intermediate calculations to 2 decimal places and final answers to whole dollar amount. Omit the “$” sign in your response.)

Product

Molding

Trimming

Total overhead

Part A27C




Part X82B




3.

Determine the overhead cost per unit for each product line using the departmental rate.. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

Product

Overhead cost

Part A27C


Part X82B


4.
Exercise 179 Using the plantwide Overhead rate to assess prices L.O. A1, P1
Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.

Process

Activity

Overhead Cost

Driver

Quantity


Components

Changeover


$

500,000


Number of batches

800


Machining



279,000


Machine hours

6,000


Setups



225,000


Number of setups

120











$

1,004,000




Finishing

Welding


$

180,300


Welding hours

3,000


Inspecting



210,000


Number of inspections

700


Rework



75,000


Rework orders

300











$

465,300




Support

Purchasing


$

135,000


Purchase orders

450


Providing space



32,000


Number of units

5,000


Providing utilities



65,000


Number of units

5,000











$

232,000











Additional production information concerning its two product lines follows.


Model 145

Model 212


Units produced


1,500



3,500


Welding hours


800



2,200


Batches


400



400


Number of inspections


400



300


Machine hours


1,800



4,200


Setups


60



60


Rework orders


160



140


Purchase orders


300



150


Required


1.

Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “$” sign in your response.)

Product

Overhead cost

Model 145


Model 212


2.

Determine the total cost per unit for each products line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. (Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.)

Product

Total cost

Model 145


Model 212


3.

Assume if the market price for Model 145 is $800 and the market price for Model 212 is $470, determine the profit or loss per unit for each model. (Input all amounts as positive values. Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.)




Model 145



Model 212



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5.
Exercise 1713 Using ABC for strategic decisions L.O. P1, P3
Consider the following data for two products of Rowena Manufacturing.


Product A

Product B

Number of units produced

10,000 units

2,000 units

Direct labor cost(@$24 per DLH)

0.20 DLH per unit

0.25 DLH per unit

Direct materials cost

$ 2 per unit

$ 3 per unit

Activity

Overhead costs


Machine setup


$

121,000


Materials handling



48,000


Quality control



80,000








$

249,000






Required


1.

Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)


Product A

Product B

Manufacturing cost per unit



2.

Assume if the market price for Product A is $20 and the market price for Product B is $60, determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Omit the “$” sign in your response. Input all amounts as positive values.)




Product A



Product B



3.

Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B? (Round your answers to 2 decimal places. Omit the “$” sign in your response.)


Product A

Product B

Number of setups required for production

10 setups

12 setups

Number of parts required

1 part / unit

3 parts / unit

Inspection hours required

40 hours

210 hours


Product A

Product B

Manufacturing cost per unit



4.1

Determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)




Product A



Product B



Problem 171A Evaluating product line costs and prices using ABC L.O. P3
[The following information applies to the questions displayed below.]
Healthy Day Company produces two beverages, PowerPunch and SlimLife. Data about these productsfollow.


PowerPunch

SlimLife


Production volume

12,500

bottles

180,000

bottles

Liquid materials

1,400

gallons

37,000

gallons

Dry materials

620

pounds

12,000

pounds

Bottles

12,500

bottles

180,000

bottles

Labels

3

labels per bottle

1

label per bottle

Machine setups

500

setups

300

setups

Machine hours

200

MH

3,750

MH

Additional data from its two production departments follow.

Department

Driver

Cost


Mixing department






Liquid materials

Gallons


$

2,304


Dry materials

Pounds



6,941


Utilities

Machine hours



1,422


Bottling department






Bottles

Units


$

77,000


Labeling

Labels per bottle



6,525


Machine setup

Setups



20,000


7.
Problem 171A Part 2
2.

What is the cost per bottle for PowerPunch and SlimLife? (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the “$” sign in your response.)


PowerPunch

SlimLife


Average cost per bottle





9.
Problem 171A Part 4
4.

What is the minimum price that the company should set per bottle of SlimLife?


$0.53 per bottle


$0.86 per bottle


$0.36 per bottle

The price of SlimLife must cover the costs associated with the product, so the minimum price for this product is $0.53 / bottle.

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