Assignment

This company is introducing a standard cost calculation system.

⓵Standard cost per unit of product set by the company

⓶ The fixed manufacturing overhead budget is 225,000￥, The standard operation is also 7,500 hours

⓷ Direct Material Related Data.

● purchase volume(credit) : 4000kg ● unit price of purchase price : 310￥/kg

● amount used : 3500kg

⓸ Actual amount of direct labor cost : ● Actual operation time 7400hours

● actual rate of wage 210￥

⓹ Actual amount of variable manufacturing overhead costs : 340000￥

Actual amount of fixed manufacturing overhead costs : 230000￥

⓺ 1200 units of finished product, There is no work in hand.

⓻ 1,100 units were sold on credit. selling price 3500￥/unit

Question

1. Analyze the differences for each of the following cost elements

3)Difference in consumption and efficiency of variable manufacturing overhead

Write about 200 words, How covid-19 affected the importance of cost estimation and cost control for project organizations. Support your answer with examples?

Willis Products Inc. uses the total cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 4,000 units of medical tablets are as follows:

Willis Products desires a profit equal to a 20% rate of return on invested assets of $319,600.

a. Determine the amount of desired profit from the production and sale of 4,000 units.
$

b. Determine the total costs for the production of 4,000 units.

Determine the cost amount per unit for the production and sale of 4,000 units.
$ per unit

c. Determine the total cost markup percentage per unit. (rounded to one decimal place).
%

d. Determine the selling price per unit. Round to the nearest cent.
$ per unit

1. What is the relationship between marginal cost (MC) and average total cost (ATC)?

2. What is the difference between positive and normative statements? Which do economists generally consider the more persuasive statement type, and why?

3. What are the conditions needed for the Supply and Demand model to hold?

4. What is the difference between Quantity Demanded (Q_D) and Demand (D)?

In the book Advanced Managerial Accounting, Robert P. Magee discusses monitoring cost variances. A cost variance is the difference between a budgeted cost and an actual cost. Magee describes the following situation:

Michael Bitner has responsibility for control of two manufacturing processes. Every week he receives a cost variance report for each of the two processes, broken down by labor costs, materials costs, and so on. One of the two processes, which we'll call process A , involves a stable, easily controlled production process with a little fluctuation in variances. Process B involves more random events: the equipment is more sensitive and prone to breakdown, the raw material prices fluctuate more, and so on.

     "It seems like I'm spending more of my time with process B than with process A," says Michael Bitner. "Yet I know that the probability of an inefficiency developing and the expected costs of inefficiencies are the same for the two processes. It's just the magnitude of random fluctuations that differs between the two, as you can see in the information below."

     "At present, I investigate variances if they exceed $2,713, regardless of whether it was process A or B. I suspect that such a policy is not the most efficient. I should probably set a higher limit for process B."

The means and standard deviations of the cost variances of processes A and B, when these processes are in control, are as follows: (Round final answers to 4 decimal places.):

Furthermore, the means and standard deviations of the cost variances of processes A and B, when these processes are out of control, are as follows:

(a) Recall that the current policy is to investigate a cost variance if it exceeds $2,713 for either process. Assume that cost variances are normally distributed and that both Process A and Process B cost variances are in control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which in-control process will be investigated more often.

     (Click to select)   Process A   Process B  is investigated more often

(b) Assume that cost variances are normally distributed and that both Process A and Process B cost variances are out of control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which out-of-control process will be investigated more often.

  (Click to select)   Process B   Process A  is investigated more often.

(c) If both Processes A and B are almost always in control, which process will be investigated more often.

  (Click to select)   Process B   Process A  will be investigated more often.

(d) Suppose that we wish to reduce the probability that Process B will be investigated (when it is in control) to .2877. What cost variance investigation policy should be used? That is, how large a cost variance should trigger an investigation? Using this new policy, what is the probability that an out-of-control cost variance for Process B will be investigated?

Background This case study compares benefit/cost analysis and cost effectiveness analysis on the same information about highway lighting and its role in accident reduction. Poor highway lighting may be one reason that proportionately more traffic accidents occur at night. Traffic accidents are categorized into six types by severity and value. For example, an accident with a fatality is valued at approximately $4 million, while an accident in which there is property damage (to the car and contents) is valued at $6000. One method by which the impact of lighting is measured compares day and night accident rates for lighted and unlighted highway sections with similar characteristics. Observed reductions in accidents seemingly caused by too low lighting can be translated into either monetary estimates of the benefits B of lighting or used as the effectiveness measure E of lighting.

Information

Freeway accident data were collected in a 5-year study. The property damage category is commonly the largest based on the accident rate. The number of accidents recorded on a section of highway is presented here

The ratios of night to day accidents involving property damage for the unlighted and lighted freeway sections are 199/379 = 0.525 and 839/2069 = 0.406, respectively. These results indicate that the lighting was beneficial. To quantify the benefit, the accident rate ratio from the unlighted section will be applied to the lighted section. This will yield the number of accidents that were prevented. Thus, there would have been (2069)(0.525) = 1086 accidents instead of 839 if there had not been lights on the freeway. This is a difference of 247 accidents. At a cost of $6000 per accident, this results in a net annual benefit of

B = (247)($6000) = $1,482,000

For an effectiveness measure of number of accidents prevented, this results in E = 247. To determine the cost of the lighting, it will be assumed that the light poles are center poles 67 meters apart with 2 bulbs each. The bulb size is 400 watts, and the installation cost is $3500 per pole. Since these data were collected over 87.8 kilometers of lighted freeway, the installed cost of the lighting is (with number of poles rounded off):

Installation cost = $3500 (87.8 / 0.067) = 3500 (1310) = $4,585,000

There are a total of 87.8/0.067_1310 poles, and electricity costs $0.10 per kWh. Therefore, the annual power cost is

Annual power cost = 1310 poles (2 bulbs/pole)(0.4 kilowatt/bulb) x (12 hours/day)(365 days/year) x ($0.10/kilowatt-hour) = $459,024 per year

For an effectiveness measure of number of accidents prevented, this results in E = 247. To determine the cost of the lighting, it will be assumed that the light poles are center poles 67 meters apart with 2 bulbs each. The bulb size is 400 watts, and the installation cost is $3500 per pole. Since these data were collected over 87.8 kilometers of lighted freeway, the installed cost of the lighting is (with number of poles rounded off):

Installation cost = $3500 (87.8 / 0.067) = 3500 (1310) = $4,585,000

There are a total of 87.8/0.067_1310 poles, and electricity costs $0.10 per kWh. Therefore, the annual power cost is

Annual power cost = 1310 poles (2 bulbs/pole)(0.4 kilowatt/bulb) x (12 hours/day)(365 days/year) x ($0.10/kilowatt-hour) = $459,024 per year

The data were collected over a 5-year period. Therefore, the annualized cost C at i = 6% per year is

Total annual cost = $4,585,000( A/P ,6%,5) + 459,024 = $1,547,503

If a benefit/cost analysis is the basis for a decision on additional lighting, the B/C ratio is B/C = 1,482,000 / 1,547,503 = 0.96

The data were collected over a 5-year period. Therefore, the annualized cost C at i = 6% per year is

Total annual cost = $4,585,000( A/P ,6%,5) + 459,024 = $1,547,503

If a benefit/cost analysis is the basis for a decision on additional lighting, the B/C ratio is B/C = 1,482,000 / 1,547,503 = 0.96

Since B/C < 1.0, the lighting is not justified. Consideration of other categories of accidents is necessary to obtain a better basis for decisions. If a cost-effectiveness analysis (CEA) is applied, due to a judgment that the monetary estimates for lighting’s benefit is not accurate, the C/E ratio is

C/E = 1,547,503 / 247 = 6265

This can serve as a base ratio for comparison when an incremental CEA is performed for additional accident reduction proposals. These preliminary B/C and C/E analyses prompted the development of four lighting options:

W) Implement the plan as detailed above; light poles every 67 meters at a cost of $3500 per pole.

X) Install poles at twice the distance apart (134 meters). This is estimated to cause the accident prevention benefit to decrease by 40%.

Y) Install cheaper poles and surrounding safety guards, plus slightly lowered lumen bulbs (350 watts) at a cost of $2500 per pole; place the poles 67 meters apart. This is estimated to reduce the benefit by 25%.

Z) Install cheaper equipment for $2500 per pole with 350-watt lightbulbs and place them 134 meters apart. This plan is estimated to reduce the accident prevention measure by 50% from 247 to 124.  

Case Study Exercises Determine if a definitive decision on lighting can be determined by doing the following:

1. Use a benefit/cost analysis to compare the four alternatives to determine if any are economically justified.

2. Use a cost-effectiveness analysis to compare the four alternatives. From an understanding viewpoint, consider the following:

3. How many property-damage accidents could be prevented on the unlighted portion if it were lighted?

4. What would the lighted, night-to-day accident ratio have to be to make alternative Z economically justified by the B/C ratio?

5. Discuss the analysis approaches of B/C and C/E. Does one seem more appropriate in this type of situation than the other? Why? Can you think of other bases that might be better for decisions for public projects such as this one

please answer just 1,2 and 5... thank you very much

we explored specifics of health care finance, including cost drivers. in a discussion, define cost driver and explain the characteristics of a good driver as opposed to a poor one

SHORT-SIGHTED VIEW OF COST CUTTING

Jamie Ericsson, the controller for Handico, has just compiled a cost report for the second quarter. The report is prepared each quarter for corporate headquarters. She has taken particular notice of several major cost categories that show significant reductions in expenditures when compared to the first quarter. She made the following list of the major cost cuts:

Concerned that there may have been errors in compiling the data, Ericsson scheduled an appointment with her supervisor, Les Winters, the divisional vice president. At the meeting, the conversation went like this.

Ericsson (C): “Les, I'm concerned about these cost cuts. Are these mistakes, or are we really making such substantial cuts in these areas?”

Winters (VP): “Your numbers look right, Jamie. I ordered these cutbacks myself. I think there's a lot of fat in this operation that can be cut, and I'm just getting started.”

Ericsson (C): “But these are all important areas to invest in, Les. I see the invoices for these costs every month, and I don't think it's wasted money at all.”

Winters (VP): “Corporate wants a lean company, Jamie. I'm just trying to give them one.”

Ericsson (C): “Have you thought through the implications, Les? Cutting general employee training will eventually take a toll on our productivity gains. Same thing for the cuts in process improvements. And cutting routine machine maintenance could mean breakdowns later on. Maybe not for a year or so, but eventually it'll take its toll.”

Winters (VP): Becoming annoyed, “Those are my concerns, Ms. Ericsson, not yours.”

Ericsson (C): “Look, Les, we're all on the same team. I'm just concerned, that's all. I feel as though I need to highlight these cost cuts in my report to corporate. They should at least be made aware of these issues. I'll need your authorization for that.”

Winters (VP): “No can do, Jamie. You are instructed to make your usual quarterly report using the standard format.”

After the meeting, Ericsson was commiserating with her close friend, Amy Ling, the chief of engineering.

Ericsson (C): “Amy, I just had a very unsatisfactory meeting with Les Winters. I shouldn't go into the details, but I'm concerned about some things.”

Ling (E): “Well, I have good news for you then. The grapevine has it that Les is on the very short list for taking over as president of our Japanese subsidiary. That would be a huge promotion for him. Word is that all he's got to do is turn in a good performance for the year here. If he does that, the job's his.”

Ericsson (C): “That explains a lot, Amy. Thanks for the heads up. I've got some thinking to do.”

Required:

1. What do you think is going on here?

2. What is the VP, Les Winters, up to? Is he acting ethically?

Why do practitioners and hospitals face daily trade-offs between cost and quantity, cost and access, and so on?