Carlisle company is a manufacturer of precision

Reference no: EM13572471

Carlisle Company is a manufacturer of precision surgicaltools. It initiated standard costing and a flexible budget on January 1, 2011. The company president, MonicaCarlisle, has been pondering how fixed manufacturing overhead should be allocated to products. Machinehourshave been chosen as the allocation base. Her remaining uncertainty is the denominator level formachine-hours. She decides to wait for the first month's results before making a final choice of whatdenominator level should be used from that day forward.

During January 2011, the actual units of output had a standard of 37,680 machine-hours allowed. Thefixed manufacturing overhead spending variance was $6,000, favorable. If the company used practicalcapacity as the denominator level, the production-volume variance would be $12,200, unfavorable. If thecompany used normal capacity utilization as the denominator level, the production-volume variance wouldbe $2,400, unfavorable. Budgeted fixed manufacturing overhead was $96,600 for the month.

1. Compute the denominator level, assuming that the normal-capacity-utilization concept is chosen. Required

2. Compute the denominator level, assuming that the practical-capacity concept is chosen.

3. Suppose you are the executive vice president. You want to maximize your 2011 bonus, which dependson 2011 operating income. Assume that the production-volume variance is written off to cost of goodssold at year-end, and assume that the company expects inventories to increase during the year. Whichdenominator level would you favor? Why?

Reference no: EM13572471

Questions Cloud

You will need 15000 in 7 years when you want to take a : you will need 15000 in 7 years when you want to take a world cruise. if you can earn 6 annually how much do you need to

Kellogg company is the worlds leading producer of : kellogg company is the worlds leading producer of ready-to-eat cereal and a leading producer of grain-based convenience

You have 10000 to invest at 5 annually and you will keep : you have 10000 to invest at 5 annually and you will keep the money invested for 10 years. what will this amount grow

Equipment was purchased for 17000 on january 1 2010 freight : equipment was purchased for 17000 on january 1 2010. freight charges amounted to 700 and there was a cost of 2000 for

Carlisle company is a manufacturer of precision : carlisle company is a manufacturer of precision surgicaltools. it initiated standard costing and a flexible budget on

What is the value of a stock dividends of 150 300 and 600 : what is the value of a stock dividends of 1.50 3.00 and 6.00 constant growth at 4 and a required return of

From records available in various offices of baraga county : from records available in various offices of baraga county you find the following information about changes in

Machine y will produce cost savings of 4000 per year for 5 : machine x will produce cost savings of 5000 per year for 4 years machine y will produce cost savings of 4000 per year

Topic drunk drivers should be imprisoned on the first : topic drunk drivers should be imprisoned on the first offense.your paper should present a reasoned convincing argument

User Account

All Pages