ABC Corporation makes skis in two departments: Department A makes the frame and Department B...

ABC Corporation makes skis in two departments: Department A makes

the frame and Department B adds the bindings and paints the skis. Monthly

capacities are as follows:

Department A Department B

Monthly capacity 4,000 pairs of skis 5,000 pairs of skis

The company can sell 5,000 pairs per month. A pair of skis sells for $500 and has a

variable cost of $250.

Required:

Assuming that ABC sells every pair it can produce up to 5,000, how many pairs of skis does ABC presently sell and what department is the bottleneck?

ABC production supervisors state they could increase Department A capacity by 300 pairs of skis on the weekend. Producing on the weekend would not affect the sales price or variable cost per unit, but would increase fixed costs by $80,000 per month. Should ABC produce skis on the weekend?

Independent of the situation in requirement (b), ABC could add additional equipment and workers to Department A, which will increase Department A capacity by 500 pairs per month. This would not affect the sales price but would increase variable cost per unit by $50, and would increase fixed cost by $100,000 per month. Should ABC add the additional equipment and workers to Department A?

ABC’s Department B’s managers believe capacity could be increased by 400 pairs. The cost would be $50,000. Should ABC pursue this option?

Expert Solution

ekkarill92 answered 1 year ago

ABC products makes parts for car engines. three departments (A, B and C) are involved in...

ABC products makes parts for car engines. three departments (A, B and C) are involved in the manufacturing process. The budgets for departmental overhead costs are $25,000, $45,000 and $30,000 respectively, which are allocated to products based on direct labor hours. Estimates of direct labor hours for each department are 5,000 7,000 and 10,000 hours respectively. The business-wide overhead absorption rate is: a. $3.00 b. $4.55 c. $4.81 d. 5.00

Company XYZ Sdn Bhd has two production departments; Department A and Department B.

Company XYZ Sdn Bhd has two production departments; Department A and Department B. The company uses the basis direct labor hour to determine predetermine overhead rate. A total of 3 500 units were produced on Job 3113.The following information relates to both departments for the year 2019:Department ADepartment BBudgeted manufacturing overheadRM 500 000RM 250 000Budgeted direct labor hours32 00025 500Budgeted machine hours3 00018 000The company shows the following information relates to Job 3113:Materials requisitioned RM 20 000Direct labor cost RM...

HSU Corporation has two service departments, Maintenance and Administration, and two producing departments A and B....

HSU Corporation has two service departments, Maintenance and Administration, and two producing departments A and B. The direct costs of each department for the last year is as follows: Administration $ 80,000 Maintenance 60,000 Department A 5,000 Department B 20,000 Information on the proportion of services supplied and used is: User Departments Administration Maintenance Dept. A Dept. B Administration 10% 60% 30% Maintenance 30% 20% 50% Using the reciprocal method of service department cost allocation Administration costs allocated to Department B is: a. $24,000...

ABC Corporation has three service departments with the following costs and activity base: Service Department Cost...

ABC Corporation has three service departments with the following costs and activity base: Service Department Cost Activity Base for Allocation Graphics Production $200,000 # of copies Accounting $500,000 # of invoices processed Personnel Department $400,000 # of employees ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information for December 31, 2017 are as follows: Micro Macro Super Direct Revenues $700,000 $850,000 $650,000 Direct Operating Expenses $50,000 $70,000 $100,000 # of copies made 20,000 30,000...

ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost...

ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost Cost Driver Graphics Production $200,000 number of copies made Accounting 500,000 number of invoices processed Personnel 400,000 number of employees ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information are as follows: Micro Macro Super Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800...

Matt limited has two production, departments, machine department and assembly department. There are two service departments,...

Matt limited has two production, departments, machine department and assembly department. There are two service departments, stores and maintenance. The budgeted overheads of each department along with overheads that have yet to be apportioned are listed below, along with details which can be used for appointment. Total Machine Dept Assembly Dept Stores Maintenance K’000 K’000 K’000 K’000 K’000 Indirect labour 1 125 000 400 000 650 000 40 000 35 000 Indirect material 310 000 160 000 120 000 10...

Part A Arona Corporation manufactures canoes in two departments, Fabrication and Waterproofing. In the Fabrication Department,...

Part A Arona Corporation manufactures canoes in two departments, Fabrication and Waterproofing. In the Fabrication Department, fiberglass panels are attached to a canoe- shaped aluminum frame. The canoes are then transferred to the Waterproofing department to be coated with sealant. Arona uses a weighted-average process cost system to collect costs in both departments. All materials in the Fabrication Department are added at the beginning of the production process. On July 1, the Fabrication Department had 30 canoes in process that...

Burton Co. requests assistance allocating costs and determining the profitability of its two departments: Skis and...

Burton Co. requests assistance allocating costs and determining the profitability of its two departments: Skis and Snowboards. Shared indirect expenses include rent and supervision. Use the Tableau Dashboard, with information from Burton’s December 31 year-end reports, for our analysis. 1. Allocate each of the indirect expenses (rent and supervision) to the two departments: Skis and Snowboards. 2. Prepare departmental income statements for Skis and Snowboards.

The computer department (CD) of ABC Corporation is considered a service department, and allocations of the...

The computer department (CD) of ABC Corporation is considered a service department, and allocations of the costs incurred by this department are made to the three divisions within ABC, (X, Y, and Z) benefiting from its use. These three divisions originally requested the idea of centrally provided computer services and estimated the extent of their long term need for computer support so that the needed capacity for this service could be identified. These estimates for long term use and the...

ABC Company operates two service departments, quality control and maintenance, and two production departments, cutting and...

ABC Company operates two service departments, quality control and maintenance, and two production departments, cutting and finishing. Service department costs are allocated to production departments using a sequential two-stage allocation method. Quality control department costs are allocated on the basis of number of inspections and maintenance department costs are allocated on the basis of machine hours. In the second stage, departmental overhead rates for the two production departments are calculated using direct labor hours as the activity for each department....

Question