True Flight Golf manufacturers a popular shaft for golf clubs. Its trade secret is a unique process for weaving high-tension wire into the center of the shaft such that energy is accumulated during the swing and released at impact. A specialized machine costing $4,500,000 is utilized in the manufacturing process. The machine has a 3-year life and no salvage value. True Flight uses straight-line depreciation. During the year, 30,000 shafts were produced, and the company was operating at full capacity. $900,000 of wire was used during the year.

(a) Is machinery depreciation fixed or variable? Is wire fixed or variable?

(b) For the two noted cost items, how much was total variable cost and total fixed cost?

(c) For the two noted cost items, how much was variable cost per unit and how much was fixed cost

per unit?

(d) Repeat requirements (b) and (c), assuming production was only 18,000 units (and wire usage was

reduced proportionately).

(e) For the following year, if the company acquired an additional machine to enable production of

45,000 total units, what would happen to the expected total and per unit variable and fixed cost?

The following information concerns several of the inventory items at DC’s:

1. Determine the amount of inventory to be reported on the financial statements using the lower of cost or net realizable value method of valuation under lower of cost or net realizable value for each item separately.
2. Determine the amount of inventory to be reported on the financial statements using the lower of cost or net realizable value method of valuation under lower of total cost or total net realizable value.
3. Determine the amount of inventory to be reported on the financial statements using the lower of cost or net realizable value method of valuation under lower of total cost or total net realizable value by department.

(Do not round your intermediate calculations. Round your answers to 2 decimal places.)

Value-Stream Costing Objective During the week of June 12, Harrison Manufacturing produced and shipped 16,400 units of its aluminum wheels: 3,600 units of Model A and 12,800 units of Model B. The following costs were incurred: Materials Salaries/ Wages Machining Other Total Cost Order processing $19,400 $19,400 Production planning 304,800 304,800 Purchasing 23,400 23,400 Stamping $380,000 38,000 $37,200 $19,200 474,400 Welding 160,000 20,000 16,000 12,000 208,000 Cladding 65,000 65,000 Testing 10,000 10,000 Packaging and shipping 10,000 10,000 Invoicing 14,200 14,200 Total $605,000 $439,800 $53,200 $31,200 $1,129,200 Required: Note: Round ALL interim calculations to two decimal places. Uses these values in subsequent computations.

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.

2. Calculate the unit cost for Models A and B. 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.

Unit Cost Model A $

Model B $

Calculate the total unit cost for Models A and B.

Unit Cost Model A $

Model B $

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 10.

a. Determine the value of the inventory at the lower of cost or market applied to each item in the inventory.

b. Determine the value of the inventory at the lower of cost or market applied to each class of inventory.

c. Determine the value of the inventory at the lower of cost or market applied to total inventory.

Lower-of-Cost-or-Market Inventory

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 10.

a. Determine the value of the inventory at the lower of cost or market applied to each item in the inventory.

b. Determine the value of the inventory at the lower of cost or market applied to each class of inventory.

c. Determine the value of the inventory at the lower of cost or market applied to total inventory.

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 10.

a. Determine the value of the inventory at the lower of cost or market applied to each item in the inventory.

b. Determine the value of the inventory at the lower of cost or market applied to each class of inventory.

c. Determine the value of the inventory at the lower of cost or market applied to total inventory.

Assume that you are considering purchasing an item that you currently manufacture. The manufacturing department of your firm has informed you that the average cost of the item produced inhouse is $66.00 per unit. You can produce as you need it, so no finished goods inventory is kept when you manufacture it yourself. Accounting has informed you that 9.1% of the fixed costs will not be saved if you stop producing the item. The item has associated with it seasonal quarterly demand as follows:

a. Calculate the total annual variable cost associated with manufacturing the item yourself in-house: Total Annual Variable Cost:_____________________________

After receiving the RFQs back from a list of suppliers, you decide to go with a supplier that will sell the item to you at a unit cost of $52. It has been calculated that the cost to place an order with this supplier is $25 per order. The holding cost is estimated to be 18% of unit cost per year with no need for safety stock since the seller you would work with is local and has the excess capacity needed to supply the items as you need them.

b. Using the Economic Order Quantity (EOQ) Model, evaluate the Total Annual Cost associated with outsourcing this item. Please fill out the table below (round to 2 decimal places):

Overall Total Annual Cost:

c. Given the annual cost analysis above, should you continue to manufacture the item in-house or purchase it from this supplier? Support you conclusion with savings figures.

Sophie has a business where she sells DVDs for $15 each. The average variable cost of production is $10 per unit. The average total cost of production is $16. What should she do in the short run?

Problem 16-2A Weighted average: Cost per equivalent unit; costs assigned to products LO C2, C3

[The following information applies to the questions displayed below.]

Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 740,000 units of product to finished goods. At the end of November, the work in process inventory consists of 191,000 units that are 70% complete with respect to conversion. Beginning inventory had $544,635 of direct materials and $218,425 of conversion cost. The direct material cost added in November is $3,644,865, and the conversion cost added is $4,150,075. Beginning work in process consisted of 70,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 70,000 were from beginning work in process and 670,000 units were started and completed during the period.

Problem 16-2A Part 3

3. Compute the direct material cost and the conversion cost assigned to units completed and transferred out and ending work in process inventory. (Round "Cost per EUP" to 2 decimal places.)

EUP Cost per EUP Total cost

Cost of units transferred out:

Direct materials

Conversion

   Total costs transferred out

Cost of ending work in process

   Direct materials

   Conversion

   Total cost of ending work in process

Total costs accounted for