# Managerial Accounting 1B Ch17

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Managerial Accounting 1B

Financial
and Managerial Accounting

Chapter 17

Exercise 17-6 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:

1.Exercise 17-6 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.)

2.Exercise 17-6 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.xercise 17-7 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:

 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 cost 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 17-9 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.

 Additional production information concerning its two product lines follows.

 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

5.

Exercise 17-13 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

 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 17-1A 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.

 Additional data from its two production departments follow.

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7.Problem 17-1A 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 17-1A 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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