Georgia Cabinets manufactures kitchen cabinets that are sold to local dealers throughout the Southeast. Because of a large backlog of orders for oak and cherry cabinets, the company decided to contract with three smaller cabinetmakers to do the final finishing operation. For the three cabinetmakers, the number of hours required to complete all the oak cabinets, the number of hours required to complete all the cherry cabinets, the number of hours available for the final finishing operation, and the cost per hour to perform the work are shown here:
| Cabinetmaker 1 | Cabinetmaker 2 | Cabinetmaker 3 | |
| Hours required to complete all the oak cabinets | 47 | 40 | 27 |
| Hours required to complete all the cherry cabinets | 64 | 52 | 36 |
| Hours available | 40 | 30 | 35 |
| Cost per hour | $34 | $41 | $52 |
a. Formulate a linear programming model that can be used
to determine the proportion of the oak cabinets and the proportion
of the cherry cabinets that should be given to each of the three
cabinetmakers in order to minimize the total cost of completing
both projects.
| Let | O1 = proportion of Oak cabinets assigned to cabinetmaker 1 |
| O2 = proportion of Oak cabinets assigned to cabinetmaker 2 | |
| O3 = proportion of Oak cabinets assigned to cabinetmaker 3 | |
| C1 = proportion of Cherry cabinets assigned to cabinetmaker 1 | |
| C2 = proportion of Cherry cabinets assigned to cabinetmaker 2 | |
| C3 = proportion of Cherry cabinets assigned to cabinetmaker 3 |
| Min | __________O1 | + | __________O2 | + | __________O3 | + | __________C1 | + | __________C2 | + | __________C3 | |||
| s.t. | ||||||||||||||
| __________O1 | __________C1 | ≤ | __________ | Hours avail. 1 | ||||||||||
| __________O2 | + | __________C2 | ≤ | __________ | Hours avail. 2 | |||||||||
| __________O3 | + | __________C3 | ≤ | __________ | Hours avail. 3 | |||||||||
| __________O1 | + | __________O2 | + | __________O3 | = | __________ | Oak | |||||||
| __________C1 | + | __________C2 | + | __________C3 | = | __________ | Cherry | |||||||
| O1, O2, O3, C1, C2, C3 ≥ 0 | ||||||||||||||
b. Solve the model formulated in part (a). What proportion of the oak cabinets and what proportion of the cherry cabinets should be assigned to each cabinetmaker? What is the total cost of completing both projects? If required, round your answers for the proportions to three decimal places, and for the total cost to two decimal places.
| Cabinetmaker 1 | Cabinetmaker 2 | Cabinetmaker 3 | |
|---|---|---|---|
| Oak | O1 = _______ | O2 = _______ | O3 = _______ |
| Cherry | C1 = _______ | C2 = _______ | C3 = _______ |
Total cost = $ __________
c. If Cabinetmaker 1 has additional hours available,
would the optimal solution change? YES OR NO
Explain.
d. If Cabinetmaker 2 has additional hours available,
would the optimal solution change? YES OR NO
Explain.
e. Suppose Cabinetmaker 2 reduced its cost to $38 per
hour. What effect would this change have on the optimal solution?
If required, round your answers for the proportions to three
decimal places, and for the total cost to two decimal
places.
| Cabinetmaker 1 | Cabinetmaker 2 | Cabinetmaker 3 | |
|---|---|---|---|
| Oak | O1 = _______ | O2 = _______ | O3 = _______ |
| Cherry | C1 = _______ | C2 = _______ | C3 = _______ |
Total cost = $ __________
Explain.
In: Math
1. For many years, Leno Corporation has used a straightforward cost-plus pricing system, marking its goods up approximately 25 percent of total cost. The company has been profitable; however, it has recently lost considerable business to foreign competitors that have become very aggressive in the marketplace. These firms appear to be using target costing.
An example of Leno’s problem is typified by item no. 8976, which has the following unit-cost characteristics:
| Direct material | $ | 100 | |
| Direct labor | 230 | ||
| Manufacturing overhead | 150 | ||
| Selling and administrative expenses | 80 | ||
The going market price for an identical product of comparable quality is $610, which is significantly below what Leno is charging.
-What is Leno’s current selling price of item no. 8976?
-If Leno used target costing for item no. 8976, what must happen to costs if the company desires to meet the market price and maintain its current rate of profit on sales? By how much?
-Suppose that by previous cost-cutting drives, costs had already been “pared to the bone” on item no. 8976. What might Leno be forced to do with its markup on cost to remain competitive? By how much?
-iTRUE OR FALSE) in many industries, prices are the result of an interaction between market forces and costs.
2. The following data pertain to Lawn Master Corporation’s top-of-the-line lawn mower.
| Variable manufacturing cost | $ | 317 | |
| Applied fixed manufacturing cost | 41 | ||
| Variable selling and administrative cost | 62 | ||
| Allocated fixed selling and administrative cost | ? | ||
To achieve a target price of $516 per lawn mower, the markup percentage is 12.1 percent on total unit cost.
Required:
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In: Accounting
In: Accounting
Sleep Tight, Inc., manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $36,000, $32,000, and $28,000, respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $42,000, $36,000, and $23,000, respectively. Direct materials purchases were $555,000, direct labor was $219,000 for the year, and factory overhead was $140,000.
Prepare a cost of goods sold budget for Sleep Tight, Inc.
| Sleep Tight, Inc. | |||
| Cost of Goods Sold Budget | |||
| For the Year Ending December 31 | |||
| Finished goods inventory, January 1 | $ | ||
| Work in process inventory, January 1 | $ | ||
| Direct materials: | |||
| Direct materials, January 1 | $ | ||
| Direct materials purchases | |||
| Cost of direct materials available for sale | $ | ||
| Direct materials inventory, December 31 | |||
| Cost of direct materials placed in production | $ | ||
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs | |||
| Total work in process during the period | $ | ||
| Work in process inventory, December 31 | |||
| Cost of goods manufactured | |||
| Cost of finished goods available for sale | $ | ||
| Finished goods inventory, December 31 | |||
| Cost of goods sold | $ | ||
In: Accounting
7. Product Cost Method of Product Costing
Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 4,620 cell phones are as follows:
| The Variable costs per unit are: | The Fixed costs are: | |||||||
| Direct materials | $61 | Factory overhead | $199,000 | |||||
| Direct labor | 30 | Selling and administrative expenses | 69,900 | |||||
| Factory overhead | 22 | |||||||
| Selling and administrative expenses | 22 | |||||||
| Total variable cost per unit | $135 | |||||||
Voice Com desires a profit equal to a 15% rate of return on invested assets of $598,200.
a. Determine the amount of desired profit from
the production and sale of 4,620 cell phones.
$
b. Determine the product cost per unit for the
production of 4,620 of cell phones. Round your answer to the
nearest whole dollar.
$ per unit
c. Determine the product cost markup percentage
for cell phones. Round your answer to two decimal places.
%
d. Determine the selling price of cell phones. Round your answers to the nearest whole dollar.
| Total Cost | $per unit |
| Markup | per unit |
| Selling price | $per unit |
In: Accounting
Product Cost Method of Product Costing
Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,320 cell phones are as follows:
| Variable costs per unit: | Fixed costs: | |||||||
| Direct materials | $76 | Factory overhead | $199,000 | |||||
| Direct labor | 30 | Selling and administrative expenses | 69,100 | |||||
| Factory overhead | 22 | |||||||
| Selling and administrative expenses | 18 | |||||||
| Total variable cost per unit | $146 | |||||||
Voice Com desires a profit equal to a 15% rate of return on invested assets of $601,500.
a. Determine the amount of desired profit from
the production and sale of 5,320 cell phones.
$
b. Determine the product cost per unit for the
production of 5,320 of cell phones. Round your answer to the
nearest whole dollar.
$ per unit
c. Determine the product cost markup percentage
for cell phones. Round your answer to two decimal places.
%
d. Determine the selling price of cell phones. Round your answers to the nearest whole dollar.
| Total Cost | $per unit |
| Markup | per unit |
| Selling price | $per unit |
In: Accounting
Sleep Tight manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $39,000, $33,000 and $25,000 respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $41,000, $38,000 and $21,000 respectively. Direct material purchases were $575,000. Direct labor was $231,000 for the year. Factory overhead was $159,000.
Prepare a cost of goods sold budget for Sleep Tight, Inc.
| Sleep Tight, Inc. | |||
| Cost of Goods Sold Budget | |||
| For the Year Ending December 31 | |||
| Finished goods inventory, January 1 | $ | ||
| Work in process inventory, January 1 | $ | ||
| Direct materials: | |||
| Direct materials, January 1 | $ | ||
| Direct materials purchases | |||
| Cost of direct materials available for sale | $ | ||
| Less direct materials inventory, December 31 | |||
| Cost of direct materials placed in production | $ | ||
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs | |||
| Total work in process during the period | $ | ||
| Less work in process inventory, December 31 | |||
| Cost of goods manufactured | |||
| Cost of finished goods available for sale | $ | ||
| Less finished goods inventory, December 31 | |||
| Cost of goods sold | $ | ||
In: Accounting
Sleep Tight, Inc. manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $40,000, $31,000 and $28,000 respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $42,000, $33,000 and $22,000 respectively. Direct materials purchases were $570,000. Direct labor was $241,000 for the year. Factory overhead was $151,000.
Prepare a cost of goods sold budget for Sleep Tight, Inc.
| Sleep Tight, Inc. | |||
| Cost of Goods Sold Budget | |||
| For the Year Ending December 31 | |||
| Finished goods inventory, January 1 | $ | ||
| Work in process inventory, January 1 | $ | ||
| Direct materials: | |||
| Direct materials, January 1 | $ | ||
| Direct materials purchases | |||
| Cost of direct materials available for sale | $ | ||
| Less direct materials inventory, December 31 | |||
| Cost of direct materials placed in production | $ | ||
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs | |||
| Total work in process during the period | $ | ||
| Less work in process inventory, December 31 | |||
| Cost of goods manufactured | |||
| Cost of finished goods available for sale | $ | ||
| Less finished goods inventory, December 31 | |||
| Cost of goods sold | $ | ||
In: Accounting
|
Output |
Total Cost |
|
50 |
870 |
|
100 |
920 |
|
150 |
990 |
|
200 |
1240 |
|
250 |
1440 |
|
300 |
1940 |
|
350 |
2330 |
TC = 944.29 - 2.24Q + 0.02Q2
Using the above estimated total cost equation determine the average and marginal cost functions. Determine the output rate that will minimize average cost and the per-unit cost at that rate of output. The current market price of caps and hats per unit is Tk. 6.00 and is expected to remain at that level for the foreseeable future. Should the firm continue its production?
(b) Using the following cost data how would you estimate your short run supply curve. If there are 100 firms in the industry, would be the industry supply? [ Hint. Think about the relationship between MC and AVC and find the output supply of a single a firm]
|
OUTPUT |
FC |
VC |
TC |
ATC |
AVC |
MC |
|
0 |
100 |
|||||
|
1 |
125 |
|||||
|
2 |
145 |
|||||
|
3 |
157 |
|||||
|
4 |
177 |
|||||
|
5 |
202 |
|||||
|
6 |
236 |
|||||
|
7 |
270 |
|||||
|
8 |
326 |
|||||
|
9 |
398 |
|||||
|
10 |
490 |
In: Economics
The following cost data relate to the manufacturing activities of Chang Company during the just completed year: Manufacturing overhead costs incurred: Indirect materials $ 15,500 Indirect labor 135,000 Property taxes, factory 8,500 Utilities, factory 75,000 Depreciation, factory 230,700 Insurance, factory 10,500 Total actual manufacturing overhead costs incurred $ 475,200 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 405,000 Direct labor cost $ 65,000 Inventories: Raw materials, beginning $ 20,500 Raw materials, ending $ 30,500 Work in process, beginning $ 40,500 Work in process, ending $ 70,500 The company uses a predetermined overhead rate of $24 per machine-hour to apply overhead cost to jobs. A total of 20,200 machine-hours were used during the year.
Required: 1. Compute the amount of underapplied or overapplied overhead cost for the year.
2. Prepare a schedule of cost of goods manufactured for the year.
Complete this question by entering your answers in the tabs below.
Compute the amount of underapplied or overapplied overhead cost for the year.
|
In: Accounting