+1-415-670-9189
info@expertsmind.com
Determine the company''s bid
Course:- Managerial Accounting
Reference No.:- EM13388




Assignment Help
Assignment Help >> Managerial Accounting

King Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are as follows:

Maintenance

$70,000

Materials handling

30,000

Setups

25,000

Inspection

50,000

Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 50,000 direct labor hours are budgeted for next year.

The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually, bids are based upon full manufacturing cost plus 30 percent.

Estimates for the proposed job are as follows:

Direct materials

$2,500

Direct labor (750 hours)

$3,750

Number of machine hours

300

Number of material moves

8

Number of setups

3

Number of inspections

5

In the past, full manufacturing cost has been calculated by allocating overhead using a volume-based driver e.g. direct labor hours. The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers.

Expected activity for the four activity drivers that would be used are:

Machine hours

16,000

Material moves

4,000

Setups

2,000

Quality inspections

8,000

Required:

  1. Determine the company's bid if direct labor hours are used as the volume-based driver and the bid is based upon full manufacturing cost plus 30 percent.
  2. Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.
  3. Which product costing method produces the more competitive bid? And why?

Problem :- 2

The Knapp Company needs to predict the labor cost in producing small carrot patch dolls. The following production information is available:

Year

Dolls Produced

Labor Hours

Labor Dollars

2005

1,150

 850

$17,000 

2006

1,600

 975

23,400

2007

1,100

 800

25,600

2008

2,100

1,150 

36,800

2009

1,500

 950

34,200

2010

1,300

 875

35,000

The technology has not changed since 2005. Wage rates have steadily increased since 2005; however, management expects no further wage increases in 2011.

Required:

  1. Select the appropriate independent variable for predicting labor cost. Explain the reason for your selection.
  2. Develop an equation to predict for 2011 the labor cost of producing carrot patch dolls. Use the high-low method.
  3. Estimate the labor cost of producing 3000 carrot patch dolls for 2011 if 3,000 dolls are expected to produce.



Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Managerial Accounting) Materials
Please give a 4-6 page with references about the information attached. This information will be employed as informative guidance to assist me completing the work prescribed.
You have been provided with a list of budgeted costs and asked to devide them into two different cost pools as part of your accounting process. You use the ABC method and accu
Write a one to two page single-spaced memo to the management of Shaw Company and include/attach your findings and compute and discuss the percentages of change in the profit
What is the goal of the EOQ model and why does a firm hold "safety stock? and what costs are a firm trying to balance when it decides on how much safety stock to hold?
Last year, Product F76D involved 4 customer orders, 459 assembly hours, and 21 batches. How much overhead cost would be assigned to Product F76D using the activity-based cos
Calculate Return on Equity (ROE) for 2014 and calculate Return on Net Operating Assets (RNOA) for 2014 - Determine the amount that would be added to property, plant and equipm
Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneap
What would be the effect on budgeted income if half of the budgeted sales volume of Product B were shifted to Product A and C in equal rupee amounts, so that the total budge