In: Accounting
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 | $ |
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 |