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




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
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
Journalize the annual adjusting entries that were made - prepare an income statement and a retained earnings statement for the year ending December 31, 2011, and a balance s
The market value of Dylan Corporation's common stock had become excessively high. The stock was currently selling for $220 per share. To reduce the market price of the common
ACT202 - MANAGEMENT ACCOUNTING - Explain the differences between the profits obtained from the traditional system and the ABC system. Which system provides a better estimat
Home Auto has not yet purchased any of the promotion items for next week. Should management substitute the Armadillo car wax for one of the three planned promotion displays?
How can we reconcile the two statements? What is a managerial accounting model? Read the article and comment on some aspect of the discussion in an attempt to shed some ligh
Evaluate Comprehensive Manufacturing Budget - calculate the impact on sales and profit if the option of upgrading the manufacturing facility is exercised and the practical p
Prepare the 2013 Form 1040 and all other required Federal forms and schedules for Brett Simons. The returns should be prepared taking the maximum tax benefit allowable into
Greene Company uses a plantwide overhead rate with direct-labor hours as the allocation base. Use the following information to solve for the amount of direct-labor hours est