A: Paul Peterson is the inventory manager for Office Supplies, Inc., a large office supply warehouse. The annual demand for paper punches is 20,000 units. The ordering cost is $100 per order, and the carrying cost is $5 per unit per year. What is the equation/formula to compute the economic order quantity? What is the EOQ?

B: Paul Peterson is considering manufacturing hole-punch devices. As in Part A, above, the annual demand is 20,000 units. The setup cost is $100 per order, and the carrying cost is $5 per unit per year. The demand rate is 100 units per day and the production rate is 150 units per day. What is the equation/formula to determine the economic lot size? What is the answer?

C: Paul Peterson (see Part B above) has found a supplier of hole-punches that offers quantity discounts. The annual demand is 20,000 units, the ordering cost is $100 per order, and the carrying cost is 0.5 of the unit price. For quantities that vary from 0 to 1,999, the unit price is $10. The price is $9.98 for quantities that vary from 2,000 units to 3,999 units and $9.96 for quantities that vary from 4,000 to 10,000 units. Should Paul take the quantity discount? Show calculation of EOQ and Total Cost for each of the 3 options. Hint: compute the economic order quantity. Hint: Complete the table below. shows the results of the total cost analysis. Discount Unit Order Material Ordering Carrying Total Number Price Quantity Cost Cost Cost Cost 1 $10 2 9.98 2,000 3 9.96 4,000

D: Kimberly Jones is in charge of four inventory items. The inventory demand and sales price for each item is summarized in the following table. Using ABC analysis, how should these inventory items be controlled? Demand Price Item 1 20,000 $ 10.00 Item 2 8,000 100.00 Item 3 7,000 5.00 Item 4 200 5.00 Hint: Using ABC analysis, determine the total annual dollar value of each item. Complete the Table below. Also show cumulative % of items and cumulative percentage of total cost. (Use “cost” for “price”). This can be used to categorize each inventory item. Which item should be carefully controlled? Cumulative Cumulative Item Annual Unit Annual $ Percentage Percentage Number Demand Cost Volume of Items of Cost 100.000 Total

E: Fun and Games, Inc. sells a variety of electronic games to children and adults. Annual demand for super Namco games is 360. Holding cost is $1 per game and ordering cost is $100 per order. Fun and Games, Inc., has determined that the economic order quantity should be 268 units given the foregoing data. What happens to the order quantity if annual demand is underestimated by 50%? In other words, what happens if actual annual demand is 540 units?

Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.

Manufacturing overhead follows:

Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.

(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.

HINT: Use 8.4708 for overhead rate calculations.

(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.

Sawaya Co., Ltd., of Japan is a manufacturing company whose total factory overhead costs fluctuate considerably from year to year according to increases and decreases in the number of direct labor-hours worked in the factory. Total factory overhead costs at high and low levels of activity for recent years are given below: Level of Activity Low High Direct labor-hours 45,600 60,800 Total factory overhead costs $ 234,300 $ 257,100 The factory overhead costs above consist of indirect materials, rent, and maintenance. The company has analyzed these costs at the 45,600-hour level of activity as follows: Indirect materials (variable) $ 59,280 Rent (fixed) 139,000 Maintenance (mixed) 36,020 Total factory overhead costs $ 234,300 To have data available for planning, the company wants to break down the maintenance cost into its variable and fixed cost elements. Required:

1. Estimate how much of the $257,100 factory overhead cost at the high level of activity consists of maintenance cost. (Hint: To do this, it may be helpful to first determine how much of the $257,100 consists of indirect materials and rent. Think about the behavior of variable and fixed costs!) (Do not round intermediate calculations.)

2. Using the high-low method, estimate a cost formula for maintenance. (Do not round intermediate calculations. Round "Variable cost element" to 2 decimal places.)

3. What total factory overhead costs would you expect the company to incur at an operating level of 50,160 direct labor-hours? (Do not round intermediate calculations.)

Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.

Manufacturing overhead follows:

Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.

(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.

HINT: Use 7.3809 for overhead rate calculations.

(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.

Activity-Based Costing and Conventional Costs Compared Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month. Gas Cooker Charcoal Smoker Units 1,000 7,000 Number of batches 40 10 Number of batch moves 80 20 Direct materials $50,000 $100,000 Direct labor $20,000 $28,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection $360,000 Amount of direct materials cost Materials movement 16,600 Number of batch moves Scheduling 30,000 Number of batches $406,600 Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent. (a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars. HINT: Use 8.4708 for overhead rate calculations. Total cost $ Answer Gas Cooker $ Answer per unit Charcoal Smoker $ Answer per unit (b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing. Total cost $ Answer Gas Cooker $ Answer per unit Charcoal Smoker $ Answer per unit

Activity-Based Costing and Conventional Costs Compared Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month. Gas Cooker Charcoal Smoker Units 1,000 3,000 Number of batches 20 10 Number of batch moves 80 20 Direct materials $30,000 $100,000 Direct labor $20,000 $29,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection $299,000 Amount of direct materials cost Materials movement 16,600 Number of batch moves Scheduling 18,000 Number of batches $333,600 Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent. (a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars. HINT: Use 6.8082 for overhead rate calculations. Total cost $Answer Gas Cooker $Answer per unit Charcoal Smoker $Answer per unit (b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing. Total cost $Answer Gas Cooker $Answer per unit Charcoal Smoker $Answer per unit

Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.

Manufacturing overhead follows:

Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.

(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.

HINT: Use 8.9585 for overhead rate calculations.

(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.

Activity-Based Costing and Conventional Costs Compared Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month. Gas Cooker Charcoal Smoker Units 1,000 3,000 Number of batches 20 10 Number of batch moves 80 20 Direct materials $30,000 $100,000 Direct labor $20,000 $29,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection $299,000 Amount of direct materials cost Materials movement 16,600 Number of batch moves Scheduling 18,000 Number of batches $333,600 Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent. (a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars. HINT: Use 6.8082 for overhead rate calculations. Total cost $Answer Gas Cooker $Answer per unit Charcoal Smoker $Answer per unit (b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing. Total cost $Answer Gas Cooker $Answer per unit Charcoal Smoker $Answer per unit

Activity-Based Costing and Conventional Costs Compared Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month. Gas Cooker Charcoal Smoker Units 1,000 3,000 Number of batches 50 10 Number of batch moves 80 20 Direct materials $50,000 $100,000 Direct labor $20,000 $21,000 Manufacturing overhead follows: Activity Cost Cost Driver Materials acquisition and inspection $315,000 Amount of direct materials cost Materials movement 16,300 Number of batch moves Scheduling 36,000 Number of batches $367,300 Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent. (a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars. HINT: Use 8.9585 for overhead rate calculations. Total cost $Answer Gas Cooker $Answer per unit Charcoal Smoker $Answer per unit (b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing. Total cost $Answer Gas Cooker $Answer per unit Charcoal Smoker $Answer per unit

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Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.

Manufacturing overhead follows:

Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.

(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.

HINT: Use 7.3809 for overhead rate calculations.

(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.