Because the purchase price has increased significantly, XYZ management has asked that an estimate be made of the cost to manufacture it in its own facilities.
The company has little experience with products requiring assembly. The engineering, manufacturing, and accounting departments have prepared a report for management which included the following estimates:
An assembly run of
10,000
units.
Additional production employees would be hired to manufacture the subassembly. However, no additional equipment, space, or supervision would be needed.
The report states that total costs (1) for
10,000
units
are estimated at
$957,000
The current purchase price is $68 a unit, so the report recommends a continued purchase of the product.
Components (outside purchases)
$120,000
Assembly labor (2)
300,000
Manufacturing overhead (3)
450,000
General and administrative overhead (4)
87,000
Total costs
$957,000
(1) The cost is estimated in a relevant range of 100,000 units.
(4) General and administrative overhead is applied at
10%
of the total manufacturing costs
The production cost for each circuit board produced with no learning is .
The production cost for each circuit board produced with the
80%
cumulative average learning curve is .
Round your answers only to the nearest dollar with no $ sign or period.
2-
Consider the following:
Product
Sales Price
Variable Production Cost
Allocated fixed manufacturing overhead
X
$40
12
36363.64
Y
$60
30
21818.18
Z
$92
55
21818.18
The sales ratio for X:Y:Z is
10:6:6
Total current sales (units)
16000
Additionally, average cost data for two levels of sales volume are as follows:
Sales Volume (units)
10,000
30000
Administration Expense (per unit)
$18
6
Sales & Marketing (per unit)
$12
12
Other Operating Expense
$2.40
1.8
X company is subject to a 40% income tax rate.
X company’s current margin of safety is
How many units of Product Y does ABC need to sell to earn a after-tax income of
$48,000 Round your answers only to the nearest dollar and units with no $ sign, comma and period.
3-
X Corporation, which uses a normal job costing system and dispose the over/under applied manufacturing overhead using write-off method, had two jobs in process at the start of 20×2:
Job No. 59, WIP Balance
$66,500
Job No. 60, WIP Balance
$139,500
X applies manufacturing overhead on the basis of machine hours.
At the beginning of the 20×2, X corporation estimated its manufacturing overhead
during the first quarter would total
$212,500
and its budgeted machine hours would total
6250
Manufacturing overhead incurred during the first quarter of 20×2 included following charges:
Depreciation
$20,000
Indirect labor
50000
Indirect materials used
4000
Other factory costs
128700
The company worked on three jobs during the first quarter.
Costs added during the first quarter were as follows:
Job No.
Direct Material
Direct Labor
Machine Hours
59
$18,000
$45,000
1500
60
0
25,000
1000
61
37,000
35,000
?
The manufacturing overhead account showed that overhead was overapplied by
$14,900
Job no. 59 and 60 were completed during the quarter, and X sold job no. 59 for
$218,000.00
Round your answers to the nearest dollar. Fill in the blank without $ or comma or period, e.g., 12345
How many machine hours were used by Job no. 61?
What was the gross margin of Job no. 59 after the adjustment of overapplied manufacturing overhead?
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