What is the minimum price that the company should set per bottle of SlimLife
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 17
Exercise 176 Plantwide overhead rate L.O. P1
[The following information applies to the questions displayed below.]
Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow. 
Molding  Trimming  
Direct labor hours  52,000  DLH  48,000  DLH  
Machine hours  30,500  MH  3,600  MH  
Overhead costs  $  730,000  $  590,000  

Data for two special order parts to be manufactured by the company in 2011 follow: 
Part A27C  Part X82B  
Number of units  9,800  units  54,500  units  
Machine hours  
Molding  5,100  MH  1,020  MH  
Trimming  2,600  MH  650  MH  
Direct labor hours  
Molding  5,500  DLH  2,150  DLH  
Trimming  700  DLH  3,500  DLH  

1.Exercise 176 Part 1
Required  
1.  Compute the plantwide overhead rate using direct labor hours as the base. (Round your answer to 2 decimal places. Omit the “$” sign in your response.) 
Plantwide overhead rate 
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2.
Exercise 176 Part 2
2.  Determine the overhead cost assigned to each product line using the plantwide rate computed in part 1.(Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.) 
Product  Overhead cost 
Part A27C  
Part X82B  

3.
Exercise 177 Departmental overhead rates L.O. P2
Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow. 
Molding  Trimming  
Direct labor hours  52,000  DLH  48,000  DLH  
Machine hours  30,500  MH  3,600  MH  
Overhead costs  $  730,000  $  590,000  

Data for two special order parts to be manufactured by the company in 2011 follow: 
Part A27C  Part X82B  
Number of units  9,800  units  54,500  units  
Machine hours  
Molding  5,100  MH  1,020  MH  
Trimming  2,600  MH  650  MH  
Direct labor hours  
Molding  5,500  DLH  2,150  DLH  
Trimming  700  DLH  3,500  DLH  

Required  
1.  Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) 
Department  Overhead rate 
Molding  
Trimming  

2.  Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1. (Round your intermediate calculations to 2 decimal places and final answers to whole dollar amount. Omit the “$” sign in your response.) 
Product  Molding  Trimming  Total overhead cost 
Part A27C  
Part X82B  

3.  Determine the overhead cost per unit for each product line using the departmental rate.. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) 
Product  Overhead cost 
Part A27C  
Part X82B  

4.
Exercise 179 Using the plantwide Overhead rate to assess prices L.O. A1, P1
Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. 
Process  Activity  Overhead Cost  Driver  Quantity  
Components  Changeover  $  500,000  Number of batches  800  
Machining  279,000  Machine hours  6,000  
Setups  225,000  Number of setups  120  



$  1,004,000  
Finishing  Welding  $  180,300  Welding hours  3,000  
Inspecting  210,000  Number of inspections  700  
Rework  75,000  Rework orders  300  



$  465,300  
Support  Purchasing  $  135,000  Purchase orders  450  
Providing space  32,000  Number of units  5,000  
Providing utilities  65,000  Number of units  5,000  



$  232,000  




Additional production information concerning its two product lines follows. 
Model 145  Model 212  
Units produced  1,500  3,500  
Welding hours  800  2,200  
Batches  400  400  
Number of inspections  400  300  
Machine hours  1,800  4,200  
Setups  60  60  
Rework orders  160  140  
Purchase orders  300  150  

Required  
1.  Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “$” sign in your response.) 
Product  Overhead cost 
Model 145  
Model 212  

2.  Determine the total cost per unit for each products line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. (Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.) 
Product  Total cost 
Model 145  
Model 212  

3.  Assume if the market price for Model 145 is $800 and the market price for Model 212 is $470, determine the profit or loss per unit for each model. (Input all amounts as positive values. Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.) 
Model 145  
Model 212  

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5.
Exercise 1713 Using ABC for strategic decisions L.O. P1, P3
Consider the following data for two products of Rowena Manufacturing. 
Product A  Product B  
Number of units produced  10,000 units  2,000 units 
Direct labor cost(@$24 per DLH)  0.20 DLH per unit  0.25 DLH per unit 
Direct materials cost  $ 2 per unit  $ 3 per unit 

Activity  Overhead costs  
Machine setup  $  121,000  
Materials handling  48,000  
Quality control  80,000  



$  249,000  




Required  
1.  Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each product line. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) 
Product A  Product B  
Manufacturing cost per unit  

2.  Assume if the market price for Product A is $20 and the market price for Product B is $60, determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Omit the “$” sign in your response. Input all amounts as positive values.) 
Product A  
Product B  

3.  Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to products, what is the cost per unit for Product A and for Product B? (Round your answers to 2 decimal places. Omit the “$” sign in your response.) 
Product A  Product B  
Number of setups required for production  10 setups  12 setups 
Number of parts required  1 part / unit  3 parts / unit 
Inspection hours required  40 hours  210 hours 

Product A  Product B  
Manufacturing cost per unit  

4.1  Determine the profit or loss per unit for each product. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.) 
Product A  
Product B  

Problem 171A Evaluating product line costs and prices using ABC L.O. P3
[The following information applies to the questions displayed below.]
Healthy Day Company produces two beverages, PowerPunch and SlimLife. Data about these productsfollow. 
PowerPunch  SlimLife  
Production volume  12,500  bottles  180,000  bottles 
Liquid materials  1,400  gallons  37,000  gallons 
Dry materials  620  pounds  12,000  pounds 
Bottles  12,500  bottles  180,000  bottles 
Labels  3  labels per bottle  1  label per bottle 
Machine setups  500  setups  300  setups 
Machine hours  200  MH  3,750  MH 

Additional data from its two production departments follow. 
Department  Driver  Cost  
Mixing department  
Liquid materials  Gallons  $  2,304  
Dry materials  Pounds  6,941  
Utilities  Machine hours  1,422  
Bottling department  
Bottles  Units  $  77,000  
Labeling  Labels per bottle  6,525  
Machine setup  Setups  20,000  

7.
Problem 171A Part 2
2.  What is the cost per bottle for PowerPunch and SlimLife? (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the “$” sign in your response.) 
PowerPunch  SlimLife  
Average cost per bottle  


9.
Problem 171A Part 4
4.  What is the minimum price that the company should set per bottle of SlimLife? 
$0.53 per bottle  
$0.86 per bottle  
$0.36 per bottle 
The price of SlimLife must cover the costs associated with the product, so the minimum price for this product is $0.53 / bottle. 
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