Target Costing

Laser Cast, Inc., manufactures color laser printers. Model J20 presently sells for $500 and has a total product cost of $400, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $480 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas:

Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.

Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $10 per unit.

Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 42% of the factory overhead are related to running injection molding machines.

The direct labor rate is $34 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Hickory Company manufactures two products—15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all $729,600 of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:

Required :

9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y?

10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?

12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?

13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z?

14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?

15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z?

Target Costing

Laser Impressions, Inc., manufactures color laser printers. Model J20 presently sells for $575 and has a total product cost of $460, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $550 next year. Laser Impressions has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost reduction ideas:

1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.
2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $12 per unit.
3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 45% of the factory overhead are related to running injection molding machines.

The direct labor rate is $38 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price is maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Target Costing

Laser Cast, Inc., manufactures color laser printers. Model J20 presently sells for $525 and has a total product cost of $420, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $500 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost reduction ideas:

1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.
2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $11 per unit.
3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 42% of the factory overhead are related to running injection molding machines.

The direct labor rate is $34 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price is maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

The following is six months of data on the cost and production volume to manufacture crates of skittles. In order to better predict costs, the manager is trying to understand the relationship between production volume and cost. Use the hi-lo method to determine the cost equation. Round as needed to the closest penny.  (Please report the cost equation in y=mx+b format).

Management believes that maintenance cost is a mixed cost that depends on machine-hours.

Using the high-low method, calculate

Variable cost per machine-hour?

Fixed cost per month?

What would total costs be for a month with 4,000 machine-hours?

Exercise 6-7

Bramble Corp. uses the periodic inventory system and reports the following for the month of June.

a. Compute the cost of the ending inventory and the cost of goods sold under FIFO and LIFO.

b. Which costing method gives the higher ending inventory?

c. Which method results in the higher cost of goods sold?

Exercise 6-9 Monty Corp. uses the periodic inventory system and reports the following for the month of June. Units Unit Cost Total Cost June 1 Inventory 310 $6 $ 1,860 12 Purchase 620 7 4,340 23 Purchase 465 11 5,115 30 Inventory 155

Compute the cost of the ending inventory and the cost of goods sold using the average-cost method.

Will the results in (a) be higher or lower than the results under FIFO and LIFO?

(Poster request: Please show steps)

Benson Company manufactures molded candles that are finished by hand. The company developed the following standards for a new line of drip candles:

During 2017, Benson planned to produce 21,000 drip candles. Production lagged behind expectations, and it actually produced only 15,000 drip candles. At year-end, direct materials purchased and used amounted to 21,400 pounds at a unit price of $0.56 per pound. Direct labor costs were actually $8.40 per hour and 14,400 actual hours were worked to produce the drip candles. Overhead for the year actually amounted to $78,000. Overhead is applied to products using a predetermined overhead rate based on estimated units.

Required

1. a.&b. Compute the standard cost per candle for direct materials, direct labor, overhead and also the total standard cost for one drip candle.

2. c.&d. Compute the actual cost per candle for direct materials, direct labor, overhead and also the total actual cost per candle.

3. e. Compute the price and usage variances for direct materials and direct labor.

4. f. Compute the fixed cost spending and volume variances.

After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows.

Activity                                                     Cost                                            Driver

Setting up machines                       $24,940                                    29 batches

Inspecting components                    $ 5,200                                         5,200 parts

Providing utilities                              $10,400                                 5,200 machine hours

Overhead has been applied to output at a rate of 50% of direct labor costs. The following data pertain to Job 615.

Direct materials                           $2,400

Direct labor                                   $3,100

Batches                                           3 batches

Number of parts                             450 parts

Machine hours                           570 machine hours

Required:

A: Classify each of its three overhead activities as unit level, batch level, product level, or facility level.

Setting up machines, Inspecting components and providing utilities

B: What is the total cost of Job 615 if Business Solutions applies overhead at 50% of direct labor cost?

C: What is the total cost of Job 615 if Business Solutions uses activity-based costing?                Total manufacturing cost $9,670 4.

Note: Please solve the problem completely with details that I can practice and learn. Thank you.