Pinnacle Company has been unhappy with the financial accounting variances that its cost accounting system has...

Pinnacle Company has been unhappy with the financial accounting variances that its cost accounting system has been producing, because its managers believe that there is more to evaluating an operation than just examining accounting numbers. Therefore, it has started gathering data to assist in the examination of nonfinancial results of operations. The following information relates to the manufacture of remote control units for televisions, radios, and stereo components:

Year 1 Year 2

Remote control units produced and sold 80,000 100,000

Direct manufacture labour-hours 12,000 13,200

Direct materials used (sets) 80,600 100,500

Direct manufacture cost per hour $18 $20

Direct materials cost per set $31 $32

Required:

1) What is the partial productivity of direct materials for each year?

2) What is the partial productivity of direct manufacturing labour for each year?

3) Did each area improve between Year 1 and Year 2? Explain.

4) What will be the projected direct material and labour needs for Year 3 if remote control units increase by 12,000 units, assuming Pinnacle Company applies the constant returns to scale technology?

Expert Solution

Part 1
	Year 1	Year 2
Partial productivity of direct materials
Production units	80000	100000
Direct materials used	80600	100500

Partial productivity of direct materials (%)	99.25558	99.50249
Part 2
	Year 1	Year 2
Partial productivity of direct labour hour
Production units	80000	100000
Direct manufacturing labour hour	12000	13200

Partial productivity of direct labour hour (per hour)	6.666667	7.575758

Part 3:

As can be seen that the both areas have been improved in the year 2 as compare to the productivity of direct material as well as productivity of direct labour hour in year 1. The direct material productivity has increased from 99.26% in year 1 to 99.50% in year 2. Similarly the partial productivity of direct manufacturing labour hour in the year 1 was 6.67 units per hour whereas the same has improved to 7.58 units per direct manufacturing labour hour in the year 2.

Year		3
Partial productivity of direct materials
Production units		112000
Required direct materials used		112560

Partial productivity of direct materials


Partial productivity of direct labour hour
Production units		112000
Required direct manufacturing labour hour		14784

ekkarill92 answered 1 year ago

If a company chooses to implement LIFO for its cost-flow assumption in its accounting system, does...

If a company chooses to implement LIFO for its cost-flow assumption in its accounting system, does this necessarily mean that the flow of the actual product out of the warehouse is being done in a "LIFO-like manner"??

Cost Accounting Butrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct...

Cost Accounting Butrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to Finished Goods Inventory and to Cost of Goods Sold (CGS) on the basis of the relative direct labor cost in these accounts at year-end. The...

The Financial Accounting Standards Board (FASB) has been working on a conceptual framework for financial accounting...

The Financial Accounting Standards Board (FASB) has been working on a conceptual framework for financial accounting and reporting and has issued seven Statements of Financial Accounting Concepts (SFAC).These SFACs are intended to set forth objectives and fundamentals that will be the basis for developing financial accounting and reporting standards. The objectives identify the goals and purpose of financial reporting. The fundamentals are the underlying concepts of financial accounting-concepts that guide the selection of transactions, events and circumstances to be accounted...

West Manufacturing Company uses a standard cost system in its accounting records. The standard costs for...

West Manufacturing Company uses a standard cost system in its accounting records. The standard costs for its one product are as follows: Materials 8 pounds at $1.00 = $ 8.00 Direct labor 1.2 hours at $14.00 = 16.80 Variable overhead 1.2 direct-labor hours at $4.00 = 4.80 Fixed overhead 1.2 direct-labor hours at $6.00 = 7.20 Total standard cost $36.80 The standard costs per unit are based on normal capacity of 3,600 direct-labor...

What is a cost accounting system? Why is a cost accounting system important for a business?...

What is a cost accounting system? Why is a cost accounting system important for a business? A business without a cost accounting system cannot effectively manage its operations. Give an example of how a company you are familiar with costs its products or services.

COST MANAGEMENT :Jay Banning, CEO and a major stockholder of Banning Inc., was unhappy with its...

COST MANAGEMENT :Jay Banning, CEO and a major stockholder of Banning Inc., was unhappy with its operating results for the past year. The company manufactures two environmentally friendly industrial caliber cleaning machines used primarily in automobile repair shops, gas stations, and auto dealerships. The master budget and operating results for the year (000s omitted except for the selling price per unit) follow: Actual Budget T10 S40 T10 S40 Sales $ 148,800 $ 59,241 $ 119,000 $ 59,000 Variable cost 59,900...

A company reports accounting data in its financial statements.

1. Ratio analysis A company reports accounting data in its financial statements. This data is used for financial analyses that provide insights into a company's strengths, weaknesses, performance in speific areas, and trends in performance. These analyses are often used to compare a company's romance to that of its competitors, or to its past or expected future performance. Such insight helps managers and analysts improve their decision making. Your boss asked you to analyze Green Hamster Manufacturing's performance for the past three...

You were unhappy that the project that you had proposed has been rejected as the NPV...

You were unhappy that the project that you had proposed has been rejected as the NPV is negative based on revised assumptions on the sales numbers. How- ever, the next day the manager came and conveyed a good news, the state gov- ernment is willing to offer you a subsidized loan at 3% interest rate, which is 6% lower than the cost of debt of your firm, for a period of 5 years. The amount committed by the state government...

A company makes customized components to specifications. Its old cost accounting system allocated all overhead costs...

A company makes customized components to specifications. Its old cost accounting system allocated all overhead costs to customer jobs based on machine hours. Its new activity-based costing system uses the following information: Activity Cost Pool and Budgeted Costs: Machine setup $ 90,000, Supervision 140,000, Machine maintenance 170,000 Activity Cost Driver and Estimated Cost Driver Level: Number of setups 180, Direct labor hours 4,000m Machine-hours 5,000 A new Kamlet Company’s order requires 4 setups, 30 direct labor hours and 50 machine-hours....

Darden Manufacturing uses a job order cost accounting system. On April 1, the company has Work...

Darden Manufacturing uses a job order cost accounting system. On April 1, the company has Work in Process Inventory of $7,600 and two jobs in process: Job No. 221, $3,600, and Job No. 222, $4,000. During April, a summary of source documents reveals the following: For Materials Requisition Slips Labor Time Tickets Job. No. 221 $2,200 $3,600 222 1,700 3,200 223 2,400 2,900 224 2,100 2,800 General use 600 400 Totals $9,000 $12,900 Darden applies manufacturing overhead to jobs at...

Question