chapter 9 h 3

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

*Contains direct materials, direct labor, and variable manufacturing overhead.

Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:

*Based on machine-hours.

During June the plant produced 4,000 pools and incurred the following costs:

1. Purchased 19,800 pounds of materials at a cost of $2.55 per pound.

2. Used 14,600 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 3,000 direct labor-hours at a cost of $6.40 per hour.

4. Incurred variable manufacturing overhead cost totaling $4,940 for the month. A total of 1,900 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Required:

1. Compute the following variances for June:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

*Contains direct materials, direct labor, and variable manufacturing overhead.

Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:

*Based on machine-hours.

During June, the plant produced 6,000 pools and incurred the following costs:

1. Purchased 29,000 pounds of materials at a cost of $3.05 per pound.

2. Used 23,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 2,400 direct labor-hours at a cost of $7.80 per hour.

4. Incurred variable manufacturing overhead cost totaling $8,400 for the month. A total of 2,100 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Required:

1. Compute the following variances for June:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

*Contains direct materials, direct labor, and variable manufacturing overhead.

Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:

*Based on machine-hours.

During June the plant produced 5,000 pools and incurred the following costs:

1. Purchased 21,000 pounds of materials at a cost of $2.65 per pound.

2. Used 15,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 3,100 direct labor-hours at a cost of $5.90 per hour.

4. Incurred variable manufacturing overhead cost totaling $4,830 for the month. A total of 2,300 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Required:

1. Compute the following variances for June:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

*Contains direct materials, direct labor, and variable manufacturing overhead.

Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:

*Based on machine-hours.

During June, the plant produced 15,000 pools and incurred the following costs:

1. Purchased 60,000 pounds of materials at a cost of $4.95 per pound.
2. Used 49,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
3. Worked 11,800 direct labor-hours at a cost of $17.00 per hour.
4. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of 5,900 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Required:

1. Compute the following variances for June:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below: Flexible Budget Actual Sales (8,000 pools) $ 240,000 $ 240,000 Variable expenses: Variable cost of goods sold* 94,000 112,470 Variable selling expenses 10,000 10,000 Total variable expenses 104,000 122,470 Contribution margin 136,000 117,530 Fixed expenses: Manufacturing overhead 55,000 55,000 Selling and administrative 70,000 70,000 Total fixed expenses 125,000 125,000 Net operating income (loss) $ 11,000 $ (7,470 ) *Contains direct materials, direct labor, and variable manufacturing overhead. Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 3.5 pounds $ 2.50 per pound $ 8.75 Direct labor 0.4 hours $ 6.50 per hour 2.60 Variable manufacturing overhead 0.2 hours* $ 2.00 per hour 0.40 Total standard cost per unit $ 11.75 *Based on machine-hours. During June, the plant produced 8,000 pools and incurred the following costs: Purchased 33,000 pounds of materials at a cost of $2.95 per pound. Used 27,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) Worked 3,800 direct labor-hours at a cost of $6.20 per hour. Incurred variable manufacturing overhead cost totaling $4,560 for the month. A total of 1,900 machine-hours was recorded. It is the company’s policy to close all variances to cost of goods sold on a monthly basis. Required: 1. Compute the following variances for June: a. Materials price and quantity variances. b. Labor rate and efficiency variances. c. Variable overhead rate and efficiency variances. 2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

*Contains direct materials, direct labor, and variable manufacturing overhead.

Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:

*Based on machine-hours.

During June, the plant produced 5,000 pools and incurred the following costs:

1. Purchased 24,500 pounds of materials at a cost of $2.95 per pound.

2. Used 19,300 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)

3. Worked 4,600 direct labor-hours at a cost of $7.70 per hour.

4. Incurred variable manufacturing overhead cost totaling $5,070 for the month. A total of 1,300 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Required:

1. Compute the following variances for June:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.

Novelty Gifts, Inc. is experiencing some inventory control problems. The manager, Wanda LaRue, currently orders 5,000 units four times each year to handle annual demand of 20,000 units. Each order costs $15 and each unit costs $1.50 to carry. Ms. LaRue maintains a safety stock of 200 units.

A) What is Novelty Gifts' current total annual inventory cost?

B) Calculate the economic ordering quantity (EOQ).

C) What is average inventory under EOQ if Ms. LaRue maintains a safety stock of 200 units?

D) Calculate total annual inventory cost under EOQ.

Suppose there is a monopolist in the market for a specific video game facing a demand curve: P = 20 - 0.5Q. The monopolist marginal cost curve is MC = 4, its total variable costs are TVC = 4Q and it faces a total fixed costs equal TFC = $78.
Note: Keep as much precision as possible during your calculations. Your final answer should be accurate to at least two decimal places.

a) Graph the demand curve and marginal cost curve, then derive and graph the marginal revenue curve.

b) Calculate the equilibrium monopoly quantity and price.

c) What is the profit for the monopoly?

d) What is the consumer surplus?

Taku-Tau company has provided you with the following information:

Selling price per unit = N$90

Variable cost per unit= N$30

Activity driver Cost driver rate Level of activity driver

Set-ups N$ 800 90

Inspection N$ 65 500

Other data:

Total fixed costs (traditional) N$900 000

Total fixed costs (ABC) N$450 000

If the company reduces the setup costs by N$100 per set up and reduces the number of inspections needed to 400, how many units must be sold to break even?

a. Production & Cost Relationship in the Long-Run

Explain the long-run production concept of diminishing returns to scale, and what it implies about the long-run average costs of production.

b.

(4 pts) Comment on the shape of the short-run total production curve that gives the input and output relationship in the short-run. Sketch and explain the shape. Your answer should be specific to the information given in the table above.