User Account

All Pages

For many years dover company manufactured a single product

Assignment Help Accounting Basics
Reference no: EM13599162

For many years, Dover Company manufactured a single product called a mono-relay. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called a bi-relay which has become increasingly popular. The birelay is a more complex product, requiring two hours of direct labour time per unit to manufacture and extensive machining in the automated portion of the plant. The mono-relay requires only one hour of direct labour time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products on the basis of direct labour hours. Despite the growing popularity of the company's new bi-relay, profits have been declining steadily. Management is beginning to believe that there may be a problem with the company's costing system. Material and labour costs per unit are as follows:
Mono- Relay Bi-Relay
Direct materials . . . . . . . . . . . . $35 $48
Direct labour($18 per hur)..........$18 $36

Management estimates that the company will incur $3,000,000 in manufacturing overhead costs during the current year and 40,000 units of the mono-relay and 10,000 units of the bi-relay will be produced and sold.

Required 1. Compute the predetermined overhead rate assuming that the company continues to apply manufacturing overhead cost on the basis of direct labour-hours. Using this rate and other data from the problem, determine the unit product cost of each product.

2. Management is considering using activity-based costing to apply manufacturing overhead cost to products for external financial reports. The activity-based costing system would have the following four activity cost pools: Estimated Activity Cost Pool Activity Measure Overhead Cost

Maintaining parts inventory . . . . . . Number of part types $ 360,000
Processing purchase orders . . . . . . Number of purchase orders 540,000
Quality control . . . . . . . . . . . . . . . Number of tests run 600,000
Machine related . . . . . . . . . . . . . . . Machine-hours 1,500,000

Total overhead cost $3,000,000 Expected Activity
Activity Measure Mono-Relay Bi-Relay Total
Number of part types . . . . . . . . . . . 300 600 900
Number of purchase orders . . . . . . 2000 1000 3000
Number of tests run . . . . . . . . . . . . 2000 6000 8000
Machine-hours . . . . . . . . . . . . . . . 20,000 30,000 50,000

Using the simplified approach described at the end of the chapter, determine the predetermined overhead rate for each of the four activity cost pools.
3. Using the predetermined manufacturing overhead rates you computed in (2) above, do the following:

a. Compute the total amount of manufacturing overhead cost that would be applied to each product using the activity-based costing system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit of each product.

b. Compute the unit product cost of each product.

Reference no: EM13599162

Questions Cloud

The steps in the accounting cycle for a merchandising : the steps in the accounting cycle for a merchandising company are different from the accounting cycle for a service
A firm applies fixed manufacturing overhead costs based on : a firm applies fixed manufacturing overhead costs based on the number of machine hours.last year the firm incurred
Prepare journal entries for each of the above : castleman holdings inc. had the following available-for-sale investment portfolio at january 1 2010. 1000 shares of
Hunt manufacturing makes tents that it sells directly to : hunt manufacturing makes tents that it sells directly to camping enthusiasts through a mail order marketing program.
For many years dover company manufactured a single product : for many years dover company manufactured a single product called a mono-relay. then three years ago the company
After seeing these figures roamings president remarked that : roaming bicycle manufacturing company currently produces the handlebars used in manufacturing its bicycles which are
Identify each cost as being relevant or irrelevant to ms : leah friend is trying to decide which two different kinds of candy to sell in her retail candy store. one type is a
Imperial jewelers is considering a special order for 20 : imperial jewelers is considering a special order for 20 handcrafted gold bracelets to be given as gifts to members of a
Jeelani construction company is composed of two divisions 1 : jeelani construction company is composed of two divisions 1 home construction and 2 commercial construction. the home

Reviews

Write a Review

Accounting Basics Questions & Answers

  What might have caused caterpillars lifo reserve

For both companies, as of the end of 2009, the existence of a LIFO reserve demonstrates that LIFO inventory is less than it would have been if FIFO had been used. For both companies, compute the ratio of LIFO inventory/FIFO inventory for 2009 endi..

  Determine the tax consequences of the transaction if

in 2012 knoxville musical sales reports taxable income of 2 million tax preference items of 100000 net positive

  What is cost of raw material issued to wip

What is Cost of raw material issued to WIP, Cost of Goods Manufactured, Cost of Goods Sold and Net Income.

  What is the cost of merchandise sold and cost

No inventory was on hand at the beginning of the month. What is the cost of merchandise sold and cost of ending inventory under the FIFO method for June?

  Shawns garden was started on may 1 with an investment of

shawns garden was started on may 1 with an investment of 45000 cash. following are the assets liabilities and common

  Variable overhead efficiency variance calculations

V Company's product has a labor standard of 2 hours per unit. For 2011, it estimates its production will be 200,000 units (400,000 DLHs). It budgets total overhead at $900,000, which results in a fixed overhead rate of $1.50 per hour.

  Nancy gave her grandson sean twenty acres of land her tax

nancy gave her grandson sean twenty acres of land. her tax basis in the land was 25000. nancys marginal tax rate for

  Sunny systems manufactures solar panels the company has a

sunny systems manufactures solar panels. the company has a theoretical capacity of 50000 units annually. practical

  Finding components of mixed overhead costs

Echeverria SA is an Argentinian manufacturing company whose total factory overhead costs fluctuate somewhat from year to year according to the number of machine-hours worked in its production facility.

  Gaap for investments in equity securities

Which is not a GAAP for investments in equity securities? a. replacement value method b. market value method c. Equity method d. consolidation

  Consignment accounting and summary entries

Prepare summary entries on the books of the consignor for these consignment sales transactions. Prepare summary entries on the books of the dealer consignee, assuming there is only one dealer involved. Prepare the parts of Tingey Industries' financia..

  What role to you feel the taxation of business entities

what role to you feel the taxation of business entities should play in supporting the revenue needs social and economic

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd