What is the saving in materials usage cost

Assignment Help Accounting Basics
Reference no: EM13138788

Drayton Company manufactures equipment used by construction companies. It currently produces a product with 30 parts, but redesign has reduced the number of parts to 9. The current activity capacity and demand for the 30 part configuration and the expected demand for the redesigned 9 part configuration are provided below:

Activities Activity driver Activity capacity Current activity demand Expected activity demand
Materials usage Number of parts 300,000 300,000 90,000
Assembly Direct labor hours 20,000 20,000 6,000
Purchasing parts Number of orders 20,000 16,000 8,000

Materials usage has a rate of $5 per part and no fixed costs. Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks who can process 5,000 purchase orders. Each clerk earns $40,000 per year. There is also a $1 per order processing cost.

a. What is the saving in materials usage cost with the new design changes?

Reference no: EM13138788

Questions Cloud

Problem related to full refund credit : Thomas Book Sales, Inc., supplies textbooks to college and university bookstores. The books are shipped with a proviso that they must be paid for within 30 days but can be returned for a full refund credit within 90 days.
Explain how a physical inventory count would differ : Explain how a physical inventory count would differ in a company using a perpetual inventory system versus one using a period inventory system.
Find probability that individuals clotting time will be more : The mean clotting time is 7.45 seconds with a standard deviation of 3.6 second. what is the probability that an individuals clotting time will be more than 4 seconds and less than 11?
How many grams of phosphorous will remain : Phosphorus-32 has a half-life of 14.0days . Starting with 4.00 g of 32p , how many grams will remain after 42.0 days?
What is the saving in materials usage cost : Drayton Company manufactures equipment used by construction companies. It currently produces a product with 30 parts, but redesign has reduced the number of parts to 9.
Neurology outpatients : You are the nurse in the neurology outpatients' clinic who sees Jake for a follow-up visit. It is now six months since Jake was diagnosed, and he is stable on medication with no more seizures.
Business of renting several apartment buildings : It has been determined that 2 tenants in $600 per month apartments and one tenant in the $1,000 per month apartment had not paid their December rent as of December 31st.
Derive equations whose solution yields maximum likelihood : Do you think they can be solved explicitly? Take the derivative of the gamma distribution and set it equal to zero and solve for alpha and beta to find the mle?
How much hcl are needed : Consider 2 Al + 6 HCl → 2 AlCl3 + 3 H2 , the reaction of Al with HCl to produce hydrogen gas. This reaction has a yield of 82.5 percent. How much HCl are needed to produce 14.0 L of H2 at 351 K and 1.11 atm ?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Long-run profitability of a segment

In a segmented contribution format income statement, what is the best measure of the long-run profitability of a segment?

  Long-term debt

Long-term debt that matures within one year and is to be converted into stock should be reported:

  Statements concerning interim financial reports

Which of the following statements concerning interim financial reports is incorrect?

  Effective and efficient statistical measurements

What are some advantages and disadvantages of each: (a) team-based, (b) network-based, and (c) boundaryless organizations?

  Record allowance for doubtful accounts

The ledger of Elburn Company at the end of the current year shows Accounts Receivable $110,000, Sales $840,000, and Sales Returns and Allowances $28,000.

  What is the importance of the cash budget

What is the importance of the cash budget? Has anyone ever been involved in the budgeting process? Tell us about your experiences.

  Positive intent and ability to hold the bonds

Lance Brothers Enterprises acquired $750,000 of 1% bonds, dated July 1, on July 1, 2011, as a long-term investment. Management has the positive intent and ability to hold the bonds until maturity.

  Compute the percentage total return

Suppose a stock had an initial price of $83 per share, paid a dividend of $1.40 per share during the year, and had an ending share price of $96.

  Compute the break-even point in dollars

Read Company reported actual sales of $2,000,000, and fixed costs of $480,000. The contribution margin ratio is 30%.Compute the break-even point in dollars, the margin of safety in dollars and the margin of safety ratio.

  Find an estimated life of ten years

Brave Industries is considering buying a machine for $180,000 with an estimated life of ten years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $12,000 each year. The..

  Problem of earnings per share of common stock

Hill Corp. had 600,000 shares of common stock outstanding on January 1, issued 900,000 shares on July 1, and had income applicable to common stock of $1,050,000 for the year ending December 31, 2010. Earnings per share of common stock for 2010 woul..

  What is an audit procedure

How does the auditor's responsibility for detecting errors differ from their responsibility to detect fraud?

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!

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