.) For each of the following activities, identify an appropriate activity-cost driver.
a. machine maintenance
Machine hour
b. machine setup
Number of Setup per batch
c. quality control
Number of units inspected or number of hours inspected
d. material ordering
Number of orders
e. production scheduling
Number of batches
f. warehouse expense
Number of units
g. engineering design
Per product.
2.) Lubriderm Corporation has the following budgeted sales for the next six-month period
Month Unit Sales
June 90,000
July 120,000
August 210,000
September 150,000
October 180,000
November 120,000
There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month.
Five pounds of materials are required for each unit produced. Each pound of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds.
Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.
Qty to be sold / 120000 / 210000 / 150000
add closing stock / 42000 / 30000 / 36000
less beginning stock / -24000 / -42000 / -30000
Qty to be produced / 138000 / 198000 / 156000
Material purchase budget
Qty to be produced / 138000 / 198000 / 156000
Each unit require 5 pounds / 690000 / 990000 / 780000
add closing stock / 297000 / 234000 / 252000
less beginning stock / -207000 / -297000 / -234000
Purhcases in pounds / 780000 / 927000 / 798000 / 2505000
Purhcases in dollars / 6240000 / 7416000 / 6384000 / 20040000
3.) The Wildcat Company has provided the following information:
Units of Output Total Cost
30,000 Units $2,188,800
40,000 Units $2,475,000
42,000 Units $2,865,600
Using the high-low method and the information provided above, identify the linear cost function equation
Low / 30000 / 2188800
Difference / 12000 / 676800
Variable cost / 56.40
y = a + bx
b =56.4
a = 2188800-30000*56.4 = 496800
fixed cost = / 496800
5.) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are:
Direct materials $0.60
Direct manufacturing labor 3.00
Variable manufacturing overhead 1.20
Fixed manufacturing overhead 1.60
Total $6.40
Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if Kirkland accepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be eliminated.
a. What is the relevant per unit cost for the original part?
.6+3+1.2+1+9000/10000 = 6.7
b. Which alternative is best for Kirkland Company? By how much?
To accept the offer of Mike company it will increase the overall profit by .7*10000 = $7000
Already Tried:
yes
Detail Required: HIGH; Urgency: HIGH