Question : 92) Ernsting Corporation produces no defective units but it wants to : 1196082

 

92)

Ernsting Corporation produces no defective units but it wants to reduce direct materials usage per unit of

CM12 in 2008.

Manufacturing conversion costs in each year depend on production capacity defined in

terms of CM12 units that can be produced.

Selling and customer-service costs depend on the number of

customers that the customer and service functions are designed to support.

Ernsting Corporation has 46

customers in 2007 and 50 customers in 2008.

The industry market size for high-end computer monitors

increased 5% from 2007 to 2008.

 

Required:

a.What is the revenue effect of the price-recovery component?

b.What is the cost effect of the price-recovery component?

c.What is the net effect on operating income as a result of the price-recovery component?

d.What is the net effect on operating income as a result of the productivity component?

 92)

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93)

Following a strategy of product differentiation, Instruments, Inc. makes a hand held calculator, II400. Instruments, Inc. presents the following data for the years 20×1 and 20×2.

 

20x120x2

Units of II400 produced and sold50,00052,500

Selling price$40$44

Direct materials (pounds)150,000153,375

Direct materials costs per kilogram $4.00$4.40

Manufacturing capacity for II400 (units)62,50062,500

Total manufacturing conversion costs$250,000$277,500

Manufacturing conversion costs per unit of capacity $8.00 $8.80

Selling and customer-service capacity (customers)30 29

Total selling and customer-service costs$180,000$181,250

Cost per customer of selling & customer-service capacity$12,000$12,500

 

Instruments, Inc. produces no defective units but it wants to reduce direct materials usage per unit of II400 in 20×2. Manufacturing conversion costs in each year depend on production capacity defined in terms of II400 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Instruments, Inc. has 23 customers in 20×1 and 25 customers in 20×2. The industry market size for hand held calculators increased 5% from 20x1to 20×2.

 

Required:

 

a.What is the revenue effect of price-recovery component?

b.What is the cost effect of price-recovery component?

c.What is the net increase in operating income as a result of the price-recovery component? 93)

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94)

Power Company has been unhappy with the financial accounting variances that its cost accounting system has been producing, because its managers believe that there is more to evaluating an operation than just examining accounting numbers. Therefore, it has started gathering data to assist in the examination of nonfinancial results of operations. The following information relates to the manufacture of remote control units for televisions, radios, and stereo components.

 

20x120x2

Remote control units produced and sold40,00050,000

Direct manufacture labour-hours6,0006,600

Direct materials used (sets) 40,30050,250

Direct manufacture cost per hour$18$20

Direct materials cost per set$31$32

 

Required:

 

a.What is the partial productivity of direct materials for each year?

b.What is the partial productivity of direct manufacturing labour for each year?

c.Did each area improve between 20×1 and 20×2? Explain.

d.What will be the projected direct material and labour needs for 20×3 if remote control units increase by 6,000 units, assuming Power Company applies the constant returns to scale technology? 94)

_____________

95)

Electronics, Inc. has been unhappy with the financial accounting variances that its cost accounting system has been producing, because its managers believe that there is more to evaluating an operation than just examining accounting numbers. Therefore, it has started gathering data to assist in the examination of nonfinancial results of operations. The following information relates to the manufacturing of remote control units for televisions, radios, and stereo components.

 

20x120x2

Remote control units produced and sold20,00024,000

Direct manufacture labour-hours3,0003,200

Direct materials used (sets)20,20026,200

Direct manufacture cost per hour$36$40

Direct materials cost per set$62$64

 

Required:

 

a.What is the partial productivity of direct materials for each year?

b.What is the partial productivity of direct manufacturing labour for each year?

c.Did each area improve between 20×1 and 20×2? Explain.

d.What will be the projected direct material and labour needs for 20×3 if remote control units increase by 3,000 units, assuming Electronics, Inc. applies the constant returns to scale technology? 95)

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96)

Grader Company manufactures road graders. Because its managers all have engineering backgrounds, they prefer nonfinancial information for their decision-making models. Therefore, they require the accountants gather data to assist in the examination of nonfinancial results of operations. The following information relates to the manufacture of a mobile paver.

 

20x120x2

Units produced and sold3,4002,800

Direct manufacture labour-hours68,00057,600

Direct materials used (tons)14,50012,200

Direct manufacture cost per hour$21$22

Direct materials cost per tonne$431$443

 

Required:

 

a.What is the partial productivity for direct materials for each year?

b.What is the partial productivity for direct manufacturing labour for each year?

c.What is the total factor productivity for each year? 96)

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97)

Lake Company manufactures small boats. Because its managers all have engineering backgrounds, they prefer nonfinancial information for their decision-making models. Therefore, they require the accountants gather data to assist in the examination of nonfinancial results of operations. The following information relates to the manufacture of a small boat.

 

20x120x2

Units produced and sold1,700 1,500

Direct manufacture labour-hours 35,00032,000

Direct materials used (tons) 7,000 6,400

Direct manufacture cost per hour $42 $44

Direct materials cost per tonne $700 $720

 

Required:

 

a.What is the partial productivity for direct materials for each year?

b.What is the partial productivity for direct manufacturing labour for each year?

c.What is the total factor productivity for each year? 97)

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