Granfield Company has a piece of manufacturing equipment with a book value of $45,500 and a remaining useful life of four years. At the end of the fouryears the equipment will have a zero-salvage value, Granfield can purchase new equipment for $153,000 and receive $26.400 in return for trading in itscurrent equipment. The current equipment has variable manufacturing costs of $50,000 per year. The new equipment will reduce variable manufacturingcosts by $24,500 per year over its four-year life. The total increase or decrease in income by replacing the current equipment with the new equipment is: Markson Company had the following results of operations for the past year:Contribution margin income statementPer Unit$ 20.00Sales (11,000 units)Variable costsDirect materialsDirect laborOverheadContribution marginFixed costsFixed overheadIncome4.256.002.007.754.25$ 3.50Annual Total$ 220,00046,75066,00022,00085,25046,750$ 38,500A foreign company offers to buy 3,500 units at $14 per unit. In addition to variable manufacturing and administrative costs, selling these units wouldincrease fixed overhead by $2,800 for the purchase of special tools. Markson's annual productive capacity is 16,500 units. If Markson accepts thisadditional business, its profits will

Granfield Company has a piece of manufacturing equipment with a book value of $45,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero-salvage value, Granfield can purchase new equipment for $153,000 and receive $26,400 in return for trading in its current equipment. The current equipment has variable manufacturing costs of $50,000 per year. The new equipment will reduce variable manufacturing costs by $24,500 per year over its four-year life. The total increase or decrease in income by replacing the current equipment with the new equipment is:

Granfield Company has a piece of manufacturing equipment with a book value of $45,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero-salvage value, Granfield can purchase new equipment for $153,000 and receive $26,400 in return for trading in its current equipment. The current equipment has variable manufacturing costs of $50,000 per year. The new equipment will reduce variable manufacturing costs by $24,500 per year over its four-year life. The total increase or decrease in income by replacing the current equipment with the new equipment is:

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost. 3. Of the unit manufacturing cost calculated in Requirement 2, 2.70 is direct materials and 5.30 is overhead. What is the prime cost per unit? Conversion cost per unit?
Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases: A. Total direct materials cost B. Electricity costs of 1,000 per month plus 0.10 per kilowatt-hour C. Per-unit cost of straight-line depreciation on factory equipment D. Salary of quality control supervisor, 20,000 per month E. Per-unit direct labor cost
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Refer to Exercise 2.21. Last calendar year, Ellerson recognized revenue of 1,312,000 and had selling and administrative expenses of 204,600. Required: 1. What is the cost of goods sold for last year? 2. Prepare an income statement for Ellerson for last year.
Wyandotte Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 256,900, direct labor cost was 176,000, and overhead cost was 308,400. There were 40,000 units produced. Required: 1. Calculate the total cost of direct materials used in production. 2. Calculate the cost of goods manufactured. Calculate the unit manufacturing cost. 3. Of the unit manufacturing cost calculated in Requirement 2, 6.62 is direct materials and 7.71 is overhead. What is the prime cost per unit? Conversion cost per unit?
Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.
Cushing, Inc., costs products using a normal costing system. The following data are available for last year: Overhead is applied on the basis of direct labor hours. What was last years per unit product cost? a. 1.39 b. 4.40 c. 4.43 d. 3.01
During the year, a company purchased raw materials of $77,321, and incurred direct labor costs of $125,900. Overhead is applied at the rate of 75% of the direct labor cost. These are the inventory balances: Compute the cost of materials used in production, the cost of goods manufactured, and the cost of goods sold.
Coops Stoops estimated its annual overhead to be $85,000 and based its predetermined overhead rate on 24,286 direct labor hours. At the end of the year, actual overhead was $90,000 and the total direct labor hours were 24,100. What is the entry to dispose of the over applied or under applied overhead?
Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? 2. What was the applied overhead for last year? 3. Was overhead over- or underapplied, and by how much? 4. What was the total cost per unit produced (carry your answer to four significant digits)?
The following cost relate to COBEED for the year: Distribution Cost 123,000Direct Materials 234,000Conversion cost 456,000Factory overhead 111,000Compute for total prime cost:
Summarized data for Walrus Co. for its first year of operations are: Sales (90,000 units) $4,500,000 Production Costs (108,000 units): Direct Material 1,512,000 Direct Labor 1,350,000 Manufacturing Overhead: Variable 810,000 Fixed 216,000 Selling and Administrative Expenses: Variable 234,000 Fixed 387,000 Question Content Area A. Prepare an income statement under absorption costing. Walrus Co.Absorption Costing Income Statement $- Select - Cost of Goods Sold: $- Select - - Select - - Select - - Select - $fill in the blank b43346f81ffcfd3_11 - Select - - Select - $- Select - - Select - $- Select - Question Content Area B. Prepare an income statement under variable costing. Walrus Co.Variable Costing Income Statement $- Select - Variable Cost of Goods Sold: $- Select - - Select - -…