Stanton Company is planning to produce 2,100units of product in 2012. Each unit requires 1.70 pounds of materials at $4.60 per pound and a half-hour of labor at $14.00 per hour. The overhead rate is 70% of direct labor.
(a) Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead.
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Direct materials |
$ |
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Direct labor |
$ |
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Overhead |
$ |
(b) Compute the standard cost of one unit of product. (Round answer to 2 decimal places, e.g. 2.75.)
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Standard cost |
$ |
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Question 3 |
In Harley Company it costs $28 per unit ($17 variable and $11 fixed) to make a product that normally sells for $44. A foreign wholesaler offers to buy 3,470units at $26 each. Harley will incur special shipping costs of $2 per unit. Assuming that Harley has excess operating capacity.
Indicate the net income (loss) Harley would realize by accepting the special order. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)
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Net Income |
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Revenues |
$ |
$ |
$ |
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Costs—Manufacturing |
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Shipping |
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Net income/(loss) |
$ |
$ |
$ |
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The special order should be |
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Question 4 |
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Vintech Manufacturing incurs unit costs of $7 ($5 variable and $2 fixed) in making a subassembly part for its finished product. A supplier offers to make 17,100 of the part at $6.20 per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs.
Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)
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Net Income |
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Variable manufacturing costs |
$ |
$ |
$ |
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Fixed manufacturing costs |
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Purchase price |
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Total annual cost |
$ |
$ |
$ |
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The decision should be to |
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Question 5 |
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Ridley Company has a factory machine with a book value of $$98,600 and a remaining useful life of 5 years. A new machine is available at a cost of $190,900. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $580,100 to $406,200.
Prepare an analysis showing whether the old machine should be retained or replaced. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)
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Retain |
Replace |
Net 5-Year |
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Variable manufacturing costs |
$ |
$ |
$ |
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New machine cost |
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Total |
$ |
$ |
$ |
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The old factory machine should be |
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