Manufactures industrial pumps

Assignment Help Financial Accounting

Reference no: EM13923563

Agent Process Equipment (APE) manufactures industrial pumps. While APE has normally used a plant wide MOH rate based on machine hour usage, over the last year APE has expanded and begun to manufacture more types of pumps. This year APE expects to incur $1,635,000 in MOH costs and use 12,000 machine hours.

Until now, clean up and disposal of scrap has been absorbed into the MOH general rate and allocated across the board. However, because of new federal environmental laws, scrap material is now considered toxic and disposal costs are much higher than in previous years. APE has therefore decided to implement ABC costing to have a more accurate understanding of its costs. Expected usage rates and costs for MOH activities in the upcoming year are as follows:

Description of Pool Cost	Estimated Cost	Cost Driver	Estimated Activity this Year
Machine Maint. Costs	$635,000	# Machine Hours	10,000
Manufacturing set-up Costs	$200,000	# set-ups	500
Scrap Disposal	$800,000	# Pounds disposed	2,000
Total MOH:	$1,635,000

Job #251 is comprised of the following activities:

500 pounds DM at $65 per pound

40 direct labor hours at $50 per labor hour

200 machine hours used

6 set-ups

200 pounds of material disposed

Calculate the cost of Job #251 using the traditional overhead allocation:

Calculate the application rates (including units) using activity based costing:

Machine Maintenance

Set up costs

Material Disposal

Using the above rates (or $1 per machine hour, $1 per set up, and $1 per pound disposed if you did not calculate above), calculate the total cost of Job #251 using ABC.

A reliable supplier has offered to "pre-manufacture" Job 251. They would purchase material and mold into forms that would still require the same machining and labor processes at your factory, but would only require 350 pounds of material. Which means that your manufacturing process would only create 50 pounds of material to be disposed.

This supplier would charge double for the material ($130/ pound) and $25,000 for their pre-manufacturing process. Final product delivery time and quality would be the same either way.

Should you pay for the pre-manufacture process? Yes / No

Why or why not? dollar costs and descriptions

Reference no: EM13923563

Questions Cloud

Purpose for an initial contact : 1) A consultant is best described as

How would you market front load washers or dryers : You are CEO of ABC Washing Machine Company, and you want to market front load washers and dryers in the Czech Republic. Taking into consideration the mean income for this country is around 20,000 USD, how would you market front load washers/dryers..

Inter company profit : Assume Push sold the inventory to Shove. Using the fully adjusted equity method, what journal entry would be recorded by Push to recognize the realization of the 20X1 deferred intercompany profit and to defer the 20X2 unrealized gross profit

Albrecht corporation had outstanding : Albrecht Corporation had outstanding 353,000 shares of common stock and 20,000 shares of 9.5%, $100 par value cumulative, nonconvertible preferred stock. On May 31, 2016, Albrecht sold for cash 12,000 shares of its common stock

Manufactures industrial pumps : Agent Process Equipment (APE) manufactures industrial pumps. While APE has normally used a plantwide MOH rate based on machine hour usage, over the last year APE has expanded and begun to manufacture more types of pumps. This year APE expects to incu..

What is the expected social welfare : What is the expected social welfare the pool can generate for the community - Show that it is impossible to satisfy the association's goals simultaneously if house-holds play (Bayesian) Nash equilibrium when answering the survey.

Possible value for the correlation : Which is a possible value for the correlation of X and Y in the a) -0.75 b) 0 c) +1 d) +0.98

Describe the set of transactions that bonita would have : Describe set of transactions that Bonita would have to undertake to take advantage of an actual futures contract price that was substantially higher or substantially lower than the theoretical value you established in Part a.

How are options traded on exchanges and in otc markets : How are options traded on exchanges and in OTC markets? How are options for stock, stock indexes, ETFs, foreign currency, and futures contracts quoted in the financial press?

User Account

All Pages