Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 5, Problem 9E
Reggie Wilmore has just started a new business—building and installing custom garage organization systems. Reggie builds the cabinets and work benches in his workshop, then installs them in clients’ garages. Reggie figures his
Required:
- 1. Four measures of activity level were mentioned in the text. Which two measures is Reggie considering in computing a predetermined overhead rate?
- 2. Compute the predetermined overhead rates using each of the measures in your answer to Requirement 1.
- 3. Which one would you recommend that Reggie use? Why?
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Reggie Wilmore has just started a new business—building and installing custom garage organization systems. Reggie builds the cabinets and work benches in his workshop, then installs them in clients’ garages. Reggie figures his overhead for the coming year will be $12,000. Since his business is labor intensive, he plans to use direct labor hours as his overhead driver. For thecoming year, he expects to complete 100 jobs, averaging 25 direct labor hours each. However,he has the capacity to complete 125 jobs averaging 25 direct labor hours each.Required:1. Four measures of activity level were mentioned in the text. Which two measures is Reggie onsidering in computing a predetermined overhead rate?2. Compute the predetermined overhead rates using each of the measures in your answer toRequirement 1.3. Which one would you recommend that Reggie use? Why?
1. Eddie is a production engineer for a major supplier of component parts for cars.
He has determined that a robot can be installed on the production line to replace
one employee. The employee earns $20 per hour and benefits worth $8 per hour
for a total annual cost of $58,240 this year. Eddie estimates this cost will increase
6% each year. The robot will cost $16,500 to operate for the first year with costs
increasing by $1500 each year. The firm uses an interest rate of 15% and a 10-
year planning horizon. The robot costs $75,000 installed and will have a salvage
value of $5000 after 10 years.
Should Eddie recommend that purchase of the robot?
Madison is the newly appointed manager of spark communication a small computer monitor manfacturing company based out of halifox nova Scottia. During her first few days on the jobs she collected the following data about the company. The company has the capacity to produce 750 monitors per month and is currently producing 525monitors every month and selling it to wholesaler The company is expenses are :rent $4000 per month, salaries of $12500 per month, insurance of $1500 per month , material is of $6 permonth, labour of $35 per month and sales commissions of $19 per month. Each month is sold for $105.
a. What is the contribution margin and the contribution rate?
b. What is the break even volume and break even revenue per month?
c. How much net income per month we earned at the current level of presentation.?
Chapter 5 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 5 - What is cost measurement? Cost accumulation? What...Ch. 5 - Why is actual costing rarely used for product...Ch. 5 - Explain the differences between job-order costing...Ch. 5 - What are some differences between a manual...Ch. 5 - Prob. 5DQCh. 5 - How do firms collect job-related information on...Ch. 5 - Explain the role of activity drivers in assigning...Ch. 5 - Define the following terms: expected actual...Ch. 5 - Why would some prefer normal activity to expected...Ch. 5 - When using normal costing, how are jobs charged...
Ch. 5 - Wilson Company has a predetermined overhead rate...Ch. 5 - Why are the accounting requirements for job-order...Ch. 5 - Explain the difference between normal cost of...Ch. 5 - Amber Company produces custom framing. For one...Ch. 5 - Amber Company produces custom framing. For one...Ch. 5 - Naranjo Company designs industrial prototypes for...Ch. 5 - Naranjo Company designs industrial prototypes for...Ch. 5 - Heitger Company is a job-order costing firm that...Ch. 5 - Frieling Company installs granite countertops in...Ch. 5 - Frieling Company installs granite countertops in...Ch. 5 - Prob. 6ECh. 5 - Vince Melders, of EcoScape Company, designs and...Ch. 5 - Refer to the data in Exercise 5.7. Vince Melders,...Ch. 5 - Reggie Wilmore has just started a new...Ch. 5 - Reggie Wilmore has just started a new...Ch. 5 - During March, Aragon Company worked on three jobs....Ch. 5 - Job Cost On April 1, Sangvikar Company had the...Ch. 5 - Job Cost On April 1, Sangvikar Company had the...Ch. 5 - On August 1, Cairle Companys work-in-process...Ch. 5 - On August 1, Cairle Companys work-in-process...Ch. 5 - Ehrling Brothers Company makes jobs to customer...Ch. 5 - During August, Skyler Company worked on three...Ch. 5 - Feldspar Company uses an ABC system to apply...Ch. 5 - Kapoor Company uses job-order costing. During...Ch. 5 - Salazar Company is a job-order costing firm that...Ch. 5 - Lorrimer Company has a job-order cost system. The...Ch. 5 - CleanCom Company specializes in cleaning...Ch. 5 - Prob. 23ECh. 5 - Geneva, Inc., makes two products, X and Y, that...Ch. 5 - Prob. 25ECh. 5 - During May, the following transactions were...Ch. 5 - Firenza Company manufactures specialty tools to...Ch. 5 - Prob. 28PCh. 5 - Cherise Ortega, marketing manager for Romer...Ch. 5 - Lieu Company is a specialty print shop. Usually,...Ch. 5 - Warrens Sporting Goods Store sells a variety of...Ch. 5 - Sutton Construction Inc. is a privately held,...Ch. 5 - Dr. Alyx Hemmings is employed by Mesa Dental. Mesa...Ch. 5 - Prob. 34P
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