Whitman Enterprises uses a traditional-costing system to est…
Whitman Enterprises uses a traditional-costing system to estimate quality-control costs for its Dragon product line. Costs are estimated at 32% of direct-labor cost, and direct labor totaled $860,000 for the quarter just ended. Management is contemplating a change to activity-based costing, and has established three cost pools: incoming material inspection, in-process inspection, and final product certification. Number of parts, number of units, and number of orders have been selected as the respective cost drivers. The following data show the pool rates that have been calculated by the company along with the quantity of driver units for the Dragon’s: Pool Rate Driver Quantities $0.50 per part 20 parts 0.12 per unit 28,000 units 115.00 per order 90 orders Required: A. Calculate the quarterly quality-control cost that is allocated to the Dragon product line under Whitman’s traditional-costing system. B. Calculate the quarterly quality-control cost that is allocated to the Dragon product line if activity-based costing is used. C. Does the traditional approach under- or over-cost the product line? By what amount?
Read DetailsDuring June, Fraser Company’s material purchases amounted to…
During June, Fraser Company’s material purchases amounted to 5,000 pounds at a price of $8.2 per pound. Actual costs incurred in the production of 1,000 units were as follows: Direct labor: $66,500 ($19 per hour) Direct material: $36,900 ($8.20 per pound) The standards for one unit of Fraser Company’s product are as follows: Direct labor: Quantity, 2.1 labor hours per unit; Rate, $21 per labor hour Direct material: Quantity, 4.2 pounds per unit; Price, $8.50 per pound Required: Compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
Read DetailsRandy’s Pizza delivers pizzas to dormitories and apartments…
Randy’s Pizza delivers pizzas to dormitories and apartments near a major state university. The company’s annual fixed costs are $48,000. The sales price averages $9, and it costs the firm $3 to make and deliver each pizza.Required: A. How many pizzas must Randy’s sell to break even?B. How many pizzas must the company sell to earn a target profit of $54,000?C. If budgeted sales total 9,900 pizzas, how much is the company’s safety margin in dollars?D. Tony’s assistant manager, an accounting major, has suggested that the firm should try to increase the contribution margin per pizza. Explain the meaning of “contribution margin” in layman’s terms.
Read DetailsThe Pines Company, which manufactures office equipment, is r…
The Pines Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available: Direct material cost $60 Direct labor cost $50 Manufacturing overhead cost $70 Allocated fixed selling and administrative cost $25 What price will the company charge if the firm uses cost-plus pricing based on total cost and a markup percentage of 35%?
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