Question : SHORT ANSWER. Write the word or phrase that best completes each : 1196159

 

SHORT ANSWER.

Write the word or phrase that best completes each statement or answers the question. 104)Sheen Manufacturing has three cost objects that it uses to assign costs in its manufacturing plants. They are:

 

Cost object #1The existence of buildings and equipment

Cost object #2The use of buildings and equipment

Cost object #3The availability and use of manufacturing labour

 

The following manufacturing overhead costs categories are found in the accounting records:

 

1.Amortization on buildings and equipment

2.Fringe benefits

3.Idle time wages

4.Lubricants for machines

5.Night security

6.Overtime premiums

7.Property insurance

8.Property taxes

9.Safety hats and shoes

10.Supervisor’s salaries

11.Utilities

 

Required:

 

Assign each of the cost categories to the one cost object you consider most appropriate. 104)

____________

105)Office Supply Company manufactures office furniture. Recently the company decided to develop a formal cost accounting system. The company is currently converting all costs into classifications as related to its manufacturing processes.

Required:

For the following items, label each as being appropriate for

?cost tracing to the finished furniture,

?cost allocation of an indirect manufacturing cost to the finished furniture, or

?as a non-manufacturing item.

 

ItemCostCostNonmanu-

Tracing              Allocationfacturing

 

Carpenter wages________________________

Amortization – office building ________________________

Glue for assembly________________________

Lathe department supervisor________________________

Lathe amortization________________________

Lathe maintenance________________________

Lathe operator wages________________________

Lumber________________________

Sales staff wages________________________

Metal brackets for drawers________________________

Washroom supplies________________________ 105)

____________

106)Boone Hospital wants to determine, to the extent possible, the actual cost for each patient stay. It is a general health care facility with all basic services but does not perform specialized services such as organ transplants.

Required: Complete the following table by

a.Classifying each cost as a direct or indirect cost with respect to each patient.

b.Classifying each item as fixed or variable with respect to the number of patient days (sum of days each patient was in hospital) the hospital incurs.

 

Cost

Direct

Indirect

Fixed

Variable

Cleaning activities

 

 

 

 

Electronic monitoring

 

 

 

 

Lab test charges

 

 

 

 

Meals for patients

 

 

 

 

Medicine

 

 

 

 

Nurses’ salaries

 

 

 

 

Operating room usage

 

 

 

 

Parking maintenance

 

 

 

 

Security

 

 

 

 

106)

____________

107)Springfield Manufacturing produces electronic storage devices, and uses the following three-part

classification for its manufacturing costs:

direct materials, direct manufacturing labor, and indirect

manufacturing costs.

Total indirect manufacturing costs for January were $300 million, and were

allocated to each product on the basis of direct manufacturing labor costs of each line.

Summary data (in

millions) for January for the most popular electronic storage device, the Big Bertha, was:

 

 

Big Bertha

Direct manufacturing costs

$9,000,000

Direct manufacturing labor costs

$3,000,000

Indirect manufacturing costs

$8,500,000

Units produced

40,000

 

Required:

 

a.Compute the manufacturing cost per unit for each product produced in January.

 

b.Suppose production will be reduced to 30,000 units in February.

Speculate as to whether the unit costs in February will most likely be higher or lower than unit costs in January; it is not necessary to calculate the exact February unit cost.

Briefly explain your reasoning.

 

107)

____________

108)Whippany manufacturing wants to estimate costs for each product they produce at its Troy plant.

The

Troy plant produces three products at this plant, and runs two flexible assembly lines.

Each assembly

line can produce all three products.

 

Required:

 

a.Classify each of the following costs as either direct or indirect for each product.

 

b.Classify each of the following costs as either fixed or variable with respect to the number of units produced of each product.

 

 

Direct

Indirect

Fixed

Variable

 

 

 

 

 

Assembly line labor wages

______

______

______

______

Plant manager’s wages

______

______

______

______

Depreciation on the assembly line equipment

______

______

______

______

Component parts for the product

______

______

______

______

Wages of security personnel for the factory

______

______

______

______

 

108)

____________

109)Macadamia Co. produced and sold 40,000 units last year. Per unit revenue and costs were as follows:

 

Revenues

 

$120.00

Cost of Goods Sold:

 

 

Direct Materials

$15.00

 

Direct Labour

20.00

 

Variable Manufacturing Overhead

10.00

 

Fixed Manufacturing Overhead

6.00

 

Total Cost of Goods Sold

 

$51.00

Gross Margin

 

$69.00

Selling and Administrative Costs:

 

 

Sales Commissions (10% of Sales)

$12.00

 

Administrative Salaries

5.00

 

Total Selling and Administrative

 

$17.00

Operating Income

 

$52.00

 

 

 

The Fixed Manufacturing Overhead provides a capacity of 50,000 units. The Production Manager has proposed leasing a new machine at a cost of $80,000 per year. This will reduce DL by 30% and improve quality so the the selling price per unit can be increased by $10. Production and sales are expected to remain the same as last year.

 

Required:

 

Calculate the new operating income assuming the leasing proposal is accepted.

 

109)

____________

110)Eichhorn Company’s Process Engineering department has the responsibility of rearranging the individual work tasks for each assembly line worker, with the goal of utilizing each worker as much as possible.

Currently, on average, each assembly line worker only has tasks that require 47 minutes per hour, and the plant manager wants this increased by at least 10 %. The company builds the Eichorn Rocket Roadster, which is selling out of dealer’s showrooms faster than the company’s assembly plants can produce them. If production can’t be increased, then sales will soon suffer.

 

Required:

Explain the effect on total costs of production, using the number of engineering changes (from Process Engineering) and at least two other cost drivers.

Choose the cost driver that you think is most logical in the circumstances, and begin your answer with a brief explanation of a cost driver. 110)

____________