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# 3-46 Job bid price, direct, sequential, and reciprocal allocations

3-46 Job bid price, direct, sequential, and reciprocal allocations Small Pump Manufacturer Service Departments Production Departments Item Maintenance Power Casting Assembly Support Costs \$750,000 \$450,000 \$150,000 \$110,000 Machine Hours 0 80000 80000 40000 Kilowatt-hours 40000 0 200000 160000 Direct Labor Hours 0 0 100000 60000 Management allocates maintenance dept. costs using machine hours Management allocates power dept. costs using kilowatt hours Separate cost driver rates are determined on machine hours basis for casting dept and on direct labor hours basis for assembly dept 1 machine hour per pump manufacture in casting department .5 labor hours to assemble pump in assembly dept Direct labor and material costs = \$32.00 per pump Potential Sell: 2 year contract to purchase 1000 pumps every month Add 25% markup to full manufacturing cost to determine bid BID PRICE for. a) Direct Method b) Sequential Method begins by allocating maintenance department costs c) Reciprocal Method

Good day!

Customer: replied 7 years ago.

I need you to answer another problem for me and I will email it to you next week

No problem and thank you, too. :)
Customer: replied 7 years ago.

Hi Neo

Thanks for the follow up how much would it cost me for answers to the following questions from the same textbook Management Accounting fifth edition by Anthony A. Atkinson

The following questions

2-38, 2-45, 3-38, 3-43, 4-25 and 4-30

Can you let me know ASAP I have a test coming up and I need to compare my answers

Thanks!

Thank you so much! :)
Customer: replied 7 years ago.

For Neo

Question 4-30

Cost Distortions: At its manufacturing plant in Deluth, Minnesota Endo Electronics company manufactures two products, X21 and Y37 for many years the company has a simple plantwide manufacturing support cost rate based on direct labor hours. A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity -based costing system that relies on a seperate rate for each manufacturing activity that causes support costs. After studing the plants manufacturing activities and costs the plant accountant has collected the followig data for the last year

Item x21 y37

Units produced and sold 50,0000 100,000

Direct labor hours used 100,000 300,000

Direct labor costs \$1,000,000 \$4,500,000

Number of times handled 40,000 20,000

Number of Parts 12,000 8,000

Number of Design changes 2,000 1,000

Number of product setups 8,000 6,000

The accountant has also determined that actual manufacturing support costs incurred last year were as follows

Cost Pool Activity costs

Handling \$3,000,000

Number of Parts 2,400,000

Design changes 3,300,000

Setups 2,800,000

Total \$11,500,000

The direct materials cost for product X21 is \$120 per unit while for product Y37 is \$140 per unit.

a) Determine the unit cost of each product using direct labor hours to allocate all manufacturing support costs.

b) Determine the unit cost of each product using activity based costing

c) Which of the two methods produces more accurate estimates of job costs? Explain

d) Suppose Endo has been setting its product prices on the basis of costs computed in parts (a) and (b). What do you recommend to Endo regarding its pricing?

e) What product level changes do you suggest on the basis of the activity based cost analysis? Who would be involved in bringing about your suggested changes?

Customer: replied 7 years ago.

4-25 Traditional activity cost drivers: Identify a cost driver for costs for each of the following

a) Machine maintenance

b) Machine setup

c) Utilities

d) Quality control

e) Material ordering

f) Production scheduling

g) Factory depreciation

h) Warehouse expense

i) Production supervision

j) Payroll accounting

k) Custodial service

m) Customer inquiry responses

n) Customer order processing

o) customer representative salaries

Good day!

Do you need all those 6 questions or just these 2 that you just posted?

Thank you so much! :)
Customer: replied 7 years ago.

I need all six questions but the two I posted is most important to me I figured I could do

I'm going to work now so I'll respond from there after 9:00am eastern time

Customer: replied 7 years ago.

Hi Neo

can we proceed with my suggestion or do you want all the questions?

I can send them all to you.

Do you have a copy of book in pdf?
Customer: replied 7 years ago.

no

I will post the solutions shortly.
Customer: replied 7 years ago.

Neo

I am at work and my textbook is at home please give me time to reivew your answers

before I accept them.

How much would I owe for all the questions?

Thank you in advance and I will have more in the future

No problem. :)

I am very sorry but we are not allowed to give you quotes of prices but based on the price you set above, it says \$45. So, if you click the Accept button, you will be charged with the said amount.
Customer: replied 7 years ago.
Thanks, XXXXX XXXXX you later
Customer: replied 7 years ago.

Neo

question 3-43 has another part it states as follows

Also compute the cost of goods completed and transferred out and cost of WIP ending inventory.

In question 2-45 is CM the capacity?

Can you post the whole question for 3-43 and 2-45 please so I may see the context of the questions?

Thank you so much! :)
Customer: replied 7 years ago.

3-43 Process costing equivalent units, product cost

The information below pertains to October production at Zippy Company's bottling plant, which produces and bottles sports drinks. Each unit consists of a case of 12 bottles.

Units Materials Conversion

Work in progress Oct 1 2,000 70% complete 60% complete

Started in October 10,000

To Account for 12,000

Completed and transf out 8,000 100% complete 100% complete
Work in progress Oct 30 4,000 40% compete 25% complete

Accounted for 12,000

Costs beg of Oct \$1,050 \$3,240

To be accounted for \$9,250 \$25,860

• a) Using the weighted-average method, determine the number of equivalent units of production for materials and conversion during October.
• b) Determine the cost per equivalent unit for materials and conversion for October and the total cost per equivalent unit.
• c) Determine whether the cost per equivalent unit for materials and conversion increased or decreased from the previous month.

Also compute the cost of goods completed and Transferred out and cost of WIP ending inventory

2-45 Profitability opportunity cost. Dawson Company produces and sells 80,000 boxes of speciality foods each year. Each box contains the same assortment of food. The company has computed the following annual costs.

Cost Item Total Costs

Variable Production costs \$400,000

Fixed Production costs 480,000
Variable selling costs 320,000

Fixed selling and admin costs 200,000

Total costs \$1,400,000

Dawson normally charges \$25 per box. A new distributor has offered to purchase 8,000 boxes at a special price of \$22 per box. Dawson will incur additional packaging costs of \$1 per box to complete this order.

• A) Suppose Dawson has a surplus capacity to produce 8,000 more boxes. What will be the effect on Dawson's income if it accepts this order?
• B) Suppose that instead of having surplus capacity to produce 8,000 more boxes. Dawson has surplus capacity to produce only 3,000 more boxes. What will be the effect on Dawson's income if it accepts the new order for 8,000 boxes?

I see. In 2-45 No; the CM is not the capacity. Capacity is the number of units a company can produce given the current resources they have. Contribution Margin is sales - Variable cost.

Edited by Neo on 10/15/2010 at 3:55 PM EST
Customer: replied 7 years ago.

Neo

sorry now getting back to you I was sick, can I accept your answer and still communitcate with you on clarifying the answers?

question 3-43 you answered above with cost of goods sold you have

cost per EUP (\$1 + \$2.90) equals to 3.90 but you have 3.83 is this an error in calculation or you wanted to total other numbers?

Question 2-45 can you explain how you got the

incremental VC 8000 * (\$5+ 4 + 1)

Incremental CM 8000 * (22 - 10)

how did you determine the 5+4+1 and the 22 - 10?

in question 4-30 b

how did you calculate the cost driver quantity 60,000, 20,000, 3,000 and 14,000

how did you calculate the cost driver rate 50, 120, 1,100, and 200

Thanks! can you answer before tomorrow?

Yes; you may accept the answer and still continue to clarify anything.

Sorry about 3-43, it's typo but the final answer is correct. It should be (\$0.96 + \$2.97).

Regarding, 2-45,
Incremental VC 8000 * (\$5+ 4 + 1)--> these are variable costs. Note that these equal to \$10.

\$400,000 / 80,000 = \$5
\$320,000 / 80,000 = \$4
"Dawson will incur additional packaging costs of \$1 per box to complete this order"

Incremental CM 8000 * (22 - 10)-->\$22 is the selling price; and the \$10 is the total variable cost per unit as noted above.

For 4-30
They are from given:

Units produced and sold 50,0000 100,000

Direct labor hours used 100,000 300,000

Direct labor costs \$1,000,000 \$4,500,000

Number of times handled 40,000 20,000 = 60,000

Number of Parts 12,000 8,000 = 20,000

Number of Design changes 2,000 1,000 = 3,000

Number of product setups 8,000 6,000 = 14,000

The cost driver rate is located in required (B), it is activity cost divided by cost driver quantity (column 2 divided by column 3).

Edited by Neo on 10/19/2010 at 12:41 PM EST
Customer: replied 7 years ago.

Neo

Last question

in question 4-30 (d) where did you get 1.25?

Thanks

It is ( 1 + markup rate) = (1 + 0.25) = 1.25
Customer: replied 6 years ago.

Neo

I have questions 6-51, 6-55, 7-62, 7-64 for Managerial Accountant 5th edition by Anthony A. Atkinson below is question 6-51 do you need me to type out the other questions?

6-51 Aramis Aromatics Company produces and sells its product AA100 to well-known cosmetics companies for \$940 per ton. The marketing manager is considering the possibility of refining AA100 further into finer perfumes before selling them to the cosmetics companies. Product AA101 is expected to command a price of \$1,500 per ton and AA102 a price of \$1,700 per ton. The maximum expected demand is 400 tons for AA101 and 100 tons of AA101 and 75 tons of AA102 in the next year. It requires 4 hours of capacity to make 1 ton of AA100 2 hours to refine 1 ton of AA100 further into AA101, 4 hours to refine 1 ton of AA100 into AA102 instead. The plant accountant has prepared the following cost sheet for the three products:

cost per t ton

Cost item AA100 AA101 AA102

Direct Materials:

Chemical and fragrance \$560 \$400 \$470

AA100 0 800 800

Direct labor

Manufacturing Support

Variable 60 30 60

Fixed 120 60 120

Total Manufacturing costs \$800 \$1,320 \$1,510

Selling Support:

Variable 20 30 30

Fixed 10 10 10

Total Cost \$830 \$1,360 \$1,550

Proposed sales level 300 tons 100 tons 75 tons

Maximum Demand 600 tons 400 tons 100 tons

Required

• a) Determine the contribution margin for each product.
• b) Determine the production levels for the three products under the present constraint on plant capacity that will maximize total contribution.
• c) Suppose a customer, Cosmos Cosmetics Company, is very interested in the new product AA101. It has offered to sign a long-term contract for 400 tons of AA101. It is also willing to pay a higher price if the entire plant capacity is dedicated to the production of AA101. What is the minimum price for AA101 at which it becomes worthwhile for Aramis to dedicate its entire capacity to the production of AA101?
• d) Suppose, instead, that the price of AA101 is \$1,500 per ton and the capacity can be increased temporarily by 600 hours if the plant is operated overtime. Overtime premium payments to workers and supervisors will increase direct labor and variable manufacturing support costs by 50% for all products. All their costs will remain unchanged. Is it worthwhile operating the plant overtime? If the plant is operated overtime is for 600 hours, what are the optimal production levels for the three products?

Please type the other questions as well.
Customer: replied 6 years ago.

I will give you question 7-64 tomorrow its long do you think I can get it before wednesday? at least 6-52?

6-52 Pricing decision

Refer to the data for Sweditrak Corporation presented in Case 4-47 the following additional information is now available. The production volume budgeted for each product in weeks 47 to 52 is the same as the volume Level in week 46. In early December, the company is considering subcontracting with a French company to produce 400 units of the deluxe model per week on a 4-week trial basis for \$200 per unit. Accepting this purchase offer would restrict Sweditrak's own deluxe production to 50 units per week.

Required

• a) Is it profitable for Sweditrak to accept this offer? (Assume the activity-based cost system is used, and use the data from weeks 45 and 46 to estimate the variable support costs.) What additional qualitative factors should Sweditrack's own deluxe production to 50 units per week. Suppose that Sweditrak is please with the quality of the trial shipment and the French company is willing to commit to produce 400 units of the deluxe model each week for the next to remain stable at 450 units per week for the next 3 years. During this 3-year period, Sweditrak can adjust the capacity of each department to any desired levels. Capacity changes will result in proportional changes in fixed costs.
• b) What are the relevant costs for this long-term decision?
• c) Will it be profitable for Sweditrak to accept the long term offer?

7-62 Environmental costs, activity based costing, Kaizen costing

Bevens Co. makes two products, product X and product Y. Bevans has produced product X for many years without generating any hazardous wastes. Recently, Bevans developed product Y, which is superior to product X in many respects. However, production of production Y generates hazardous wastes. Because of the hazardous wastes, Bevans now must deal with hazardous waste disposal, governmental reports and inspections, and safe handling procedures.

Bevans Co. uses a cost driver rate based on machine hours to assign manufacturing support costs to its two products. Because of concerns about the accuracy of the product costing system, Joel Dempsey, the controller, undertook an activity-based costing analysis of the manufacturing support costs. The resulting cost information is summarized in the following table:

Product X Product Y

Direct costs (material plus labor) 9,000,000 4,000,000

Unit-level support 2,000,000 1,000,000

Batch-level support 15,000,000 20,000,000

Product level support 5,000,000 8,000,000

Environmental support 0 14,000,000

Total machine hours 10,000,000 6,000,000

Number of units 100,000,000 40,000,000

• a) Compute product costs per unit for products X and Y using the current cost driver rate based on machine hours for manufacturing support costs.
• b) Compute product costs per unit for products X and Y using the activity based costing figures provided in the table.
• c) Explain the reasons for the differences in cost for each product using the cost systems. (you may wish to compute unit-level support, product-level support, and environmental support costs per unit.)
• d) Bevans has been selling products X and Y at a price equal to 1.5 times the product cost computed using the machine-hour based cost driver rate for manufacturing support costs. Compute these prices and provide recommendations to Bevans management concerning profit improvement through pricing changes and cost reduction through manufacturing improvements.
No problem. You can get it before Wednesday.
Customer: replied 6 years ago.
thanks
Please send me the question 7-64.
Customer: replied 6 years ago.

7-64 the question is pages for Merceds benz, I'm going to skip that one

can you send me the others without 7-64 if I find out I have to do 7-64 I'll ask as a seperate question. I rather have the other questions so I can study them and ask you to clarify anything I need before tomorrow

Thanks!

Customer: replied 6 years ago.

I will review as usual tonight, I'm at work and accept at that point. Your answers are always right

Thanks!

Customer: replied 6 years ago.

Hi can you tell me for a) where did you get 680 and for Direct materials AA 100 and in

d) where did you get 740 for direct materials

Customer: replied 6 years ago.

I accepted your answer and it says that I already accepted can you let me know if

you got paid?

No; not yet.

Regarding your question, can you repost 6-51 again. I think there are missing information.

Edited by Neo on 11/10/2010 at 3:43 AM EST
Customer: replied 6 years ago.

what do you mean repost? how?

6-51 Aramis Aromatics Company produces and sells its product AA100 to well-known cosmetics companies for \$940 per ton. The marketing manager is considering the possibility of refining AA100 further into finer perfumes before selling them to the cosmetics companies. Product AA101 is expected to command a price of \$1,500 per ton and AA102 a price of \$1,700 per ton. The maximum expected demand is 400 tons for AA101 and 100 tons of AA101 and 75 tons of AA102 in the next year. It requires 4 hours of capacity to make 1 ton of AA100 2 hours to refine 1 ton of AA100 further into AA101, 4 hours to refine 1 ton of AA100 into AA102 instead. The plant accountant has prepared the following cost sheet for the three products:

cost per t ton

Cost item AA100 AA101 AA102

Direct Materials:

Chemical and fragrance \$560 \$400 \$470

AA100 0 800 800

Direct labor

Manufacturing Support

Variable 60 30 60

Fixed 120 60 120

Total Manufacturing costs \$800 \$1,320 \$1,510

Selling Support:

Variable 20 30 30

Fixed 10 10 10

Total Cost \$830 \$1,360 \$1,550

Proposed sales level 300 tons 100 tons 75 tons

Maximum Demand 600 tons 400 tons 100 tons

Required

• a) Determine the contribution margin for each product.
• b) Determine the production levels for the three products under the present constraint on plant capacity that will maximize total contribution.
• c) Suppose a customer, Cosmos Cosmetics Company, is very interested in the new product AA101. It has offered to sign a long-term contract for 400 tons of AA101. It is also willing to pay a higher price if the entire plant capacity is dedicated to the production of AA101. What is the minimum price for AA101 at which it becomes worthwhile for Aramis to dedicate its entire capacity to the production of AA101?
• d) Suppose, instead, that the price of AA101 is \$1,500 per ton and the capacity can be increased temporarily by 600 hours if the plant is operated overtime. Overtime premium payments to workers and supervisors will increase direct labor and variable manufacturing support costs by 50% for all products. All their costs will remain unchanged. Is it worthwhile operating the plant overtime? If the plant is operated overtime is for 600 hours, what are the optimal production levels for the three products?

No; not repost. I just need to see the information again if it is complete.

Cost item AA100 AA101 AA102

Direct Materials:

Chemical and fragrance \$560 \$400 \$470

AA100 0 800 800

Direct labor

Manufacturing Support

Variable 60 30 60

Fixed 120 60 120

Total Manufacturing costs \$800 \$1,320 \$1,510

Selling Support:

Variable 20 30 30

Fixed 10 10 10

Total Cost \$830 \$1,360 \$1,550

Proposed sales level 300 tons 100 tons 75 tons

Maximum Demand 600 tons 400 tons 100 tons

Can you check the total please? It doesn't seem right when you add the figures above.

Edited by Neo on 11/10/2010 at 2:09 PM EST
Please do not forget to click the Accept button.

Thank you so much! :)
Customer: replied 6 years ago.
It says that I already accepted
Please create a new post addressed to me so I may post there and you may accept.

Thank you.

Edited by Neo on 11/15/2010 at 1:08 AM EST
Customer: replied 6 years ago.

how do I create a new post? and when I do create the post do I copy my question from

above?

Just type "For Neo" in the box. Then, click "Get an Answer". Then set the price.

Edited by Neo on 11/15/2010 at 6:14 PM EST
Customer: replied 6 years ago.
I did it
I checked but I think I have not completed the process. Please try again.
Customer: replied 6 years ago.
for neo

.
Customer: replied 6 years ago.

There is an error when I try to do it again it says just answer is aware of the error

I don't know if you can check on your end

.
Customer: replied 6 years ago.
I need answers to questions 8-77, 8-79, 9-46 and 9-47 do you need me to type them out
Yes please. By the way, I did not receive your accept for the last set of problems yet.
Customer: replied 6 years ago.

9-46 and 9-47 has a lot of pages for background I'm not sure how I'll type that up

please do the following and I will try to scan the others or I will have to accept these two only.

8-79 In the mid 1990's mobile corporation marketing and refining (M&R) division underwent a major reorganization and developed new strategic directions. In conjunction with these changes M&R developed a balanced scoreboard around four perspectives: financial , customer, internal business processes and learning and growth. Subsequently M&R linked compensation to its balanced scoreboard metrics. To illustrate all salaried employees in M&R natural business units received the following percentages of their competitive market salary.

Poor performance average performance performance best

Within industry Within industry in industry

Base Pay 90% 90% 90%

Award based on performance

of financial metrics 1-2% 3-6% 10%

Award based on performance

On balance scoreboard

Metrics for the M&R division

Total pay as percentage

Of market salary 91-92% 98-104% 120%

The balance scoreboard included numerous metrics. M&R's financial metrics included return on capital employed and profitability and customer metrics included share of targeted segments of consumers and profitability of dealers. Internal business process metrics included safety and quality indices. Finally learning and growth metrics included an index of employees perceptions of the work climate at M&R.

Business units developed their own balanced scoreboard. In addition to choosing targets for scorecard metrics, the business units chose percentage weights that determined how much the achieved scoreboard measures would contribute to the bonus pool displayed in the table. These percentage weights were required to sum to 100%, furthermore in connection with the award for performance on the business unit balanced scoreboard metrics, the business units assigned a performance factor that is a degree of difficulty of target achievement for each target. The performance factors are similar in concept to those in diving or gymnastic competitions where performance scores depend on difficulty of attempted dive or gymnastic routine. The performance factors underwent review by peers, under management and the employees whose evaluation and compensation depend on the performance factors. The performance factors ranged from 1.25 (for best in industry performance) to 0.7 for poor performance. A target corresponding to average industry performance rated a 1.0 performance factor.

• a) What are the advantages and concerns in linking compensation to a balanced scoreboard generally
• b) Evaluate M&R's approach to linking compensation to multiple measures (balanced scoreboard measures) including its system of assigning degrees of difficulty to achieving targets. In your response consider the process that is involved in developing the compensation scheme.

8-77 Chow Company is an insurance company in Hong Kong. Chow hires 55 people to process insurance claims. The volume of claims is extremely high and all claims examiners are kept extremely busy. The number of claims in which errors are made runs about 10%, If a claim has an error, it must be corrected by the claims examiners. After looking at the data Judy Choy senior manager of the division, was not satisfied with the volume of claims processed. She instructed Anne Wu the manager to motivate the claims examiners to work faster. Judy believes that the claims examiners are working as fast as they possibly can. She is also concerned that, by working faster, the examiners will make more errors.

• a) How should Anne Wu handle this situation?
• b) On what performance measures is the organization relying?
• c) What performance measures should the organization use?

Ok.

Can you try to click the Accept button now if it working because I did not receive an accept from the last set of questions.
Customer: replied 6 years ago.

I accepted and it said that I already and asked if I wanted to give additonal payment

I said yes and it hit my card. Now I will check to see if my card was hit twice for this transaction.

If you now have the payment do you have the answer to the current questions?

Customer: replied 6 years ago.
I need to adjust my questions for you I do need 8-77 and 9-47 not 8-79
Customer: replied 6 years ago.
can I scan and send an attachement of the questions? if so how do I do that?
Customer: replied 6 years ago.
can I scan and send an attachement of the questions? if so how do I do that? I will try to scan it tomorrow
You may upload the file in http://www.mediafire.com

After the uploading process is completed, click the word "Share" at the right side of the screen, then copy and paste the sharing URL (link) it will generate.
Customer: replied 6 years ago.

http://www.mediafire.com/?2u419h94oegbike

Please let me know if this works

The problem is 9-47 I need it before Wednesday 12/1/2010

Customer: replied 6 years ago.
did you get the attachment?
Yes; I got the attachment.