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.)

Plantwide overhead

rate

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.

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.

Managerial Accounting 1BFinancial

and Managerial AccountingChapter 17Exercise 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. MoldingTrimming 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:Required1.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.) Plantwide overhead

rate

2.Exercise 17-6 Part 22.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.)ProductOverhead

cost Part A27C Part X82B3.xercise 17-7 Departmental overhead rates L.O. P2Textra 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. MoldingTrimming 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:Required1.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.)DepartmentOverhead

rate Molding Trimming2.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.) ProductMoldingTrimmingTotal

overhead

cost Part A27C Part X82B3.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.) ProductOverhead

cost Part A27C Part X82B4.Exercise 17-9 Using the plantwide Overhead rate to assess prices

L.O. A1, P1Real 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.Required1.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.) ProductOverhead

cost Model 145 Model 2122.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.) ProductTotal

cost Model 145 Model 2123.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 2125.Exercise 17-13 Using ABC for strategic decisions L.O. P1, P3Consider the following data for

two products of Rowena Manufacturing. Product

AProduct

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 unitActivityOverhead

costs Machine setup $121,000 Materials handling 48,000 Quality control 80,000 $249,000 Product

AProduct

B Manufacturing cost per

unit2.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 B3.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

AProduct

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

AProduct

B Manufacturing cost per

unit4.1 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 BProblem 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. 7.Problem 17-1A Part 22.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 44.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 bottleThe price of SlimLife must cover

the costs associated with the product, so the minimum price for this product

is $0.53 / bottle.