Question

In: Accounting

Value-Stream Costing Objective During the week of June 12, Harrison Manufacturing produced and shipped 17,200 units...

Value-Stream Costing Objective

During the week of June 12, Harrison Manufacturing produced and shipped 17,200 units of its aluminum wheels: 3,800 units of Model A and 13,400 units of Model B. The following costs were incurred:

Materials        Salaries/
Wages
       Machining        Other        Total Cost
Order processing        $20,000                      $20,000
Production planning        228,600                      228,600
Purchasing        22,500                      22,500
Stamping $365,000        36,500        $37,400        $20,000        458,900
Welding 150,000        42,000        42,000        12,000        246,000
Cladding 655,000                             655,000
Testing        11,000                      11,000
Packaging and shipping        9,000                      9,000
Invoicing        12,800                      12,800
  Total $1,170,000        $382,400        $79,400        $32,000        $1,663,800

Required:

1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost. Round your answer to the nearest dollar amount.
$ per unit

2. Calculate the unit cost for Models A and B. Round your answers to the nearest dollar amount.

Unit Cost
Model A $
Model B $

3. What if Model A is responsible for 40 percent of the materials cost? Calculate the unit materials cost for Models A and B. Round your answers to the nearest dollar amount.

Unit Cost
Model A $
Model B $

Calculate the total unit cost for Models A and B. Round your interim calculations and final answers to the nearest dollar amount.

Unit Cost
Model A $
Model B $

Solutions

Expert Solution

1 Computation of unit cost (a Single product value stream):
Unit cost = Total Cost / Total Units
= $16,63,800 / 17,200
= $                97
2 Unit cost
Model A = $                97
Model B = $                97
3 Computation of unit material cost:
Model A = $11,70,000 X 40%
= $    4,68,000
Model B = $11,70,000 X 60%
= $    7,02,000
Computation of Total unit material cost:
Model A = ($97 X 3,800) + [($16,63,800 - $11,70,000) X 3,800 / 17,200]
= $    4,77,695
Model B = ($16,63,800 - $4,77,695)
= $ 11,86,105

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