What is the saving in materials usage cost

Assignment Help Accounting Basics
Reference no: EM13138788

Drayton Company manufactures equipment used by construction companies. It currently produces a product with 30 parts, but redesign has reduced the number of parts to 9. The current activity capacity and demand for the 30 part configuration and the expected demand for the redesigned 9 part configuration are provided below:

Activities Activity driver Activity capacity Current activity demand Expected activity demand
Materials usage Number of parts 300,000 300,000 90,000
Assembly Direct labor hours 20,000 20,000 6,000
Purchasing parts Number of orders 20,000 16,000 8,000

Materials usage has a rate of $5 per part and no fixed costs. Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks who can process 5,000 purchase orders. Each clerk earns $40,000 per year. There is also a $1 per order processing cost.

a. What is the saving in materials usage cost with the new design changes?

Reference no: EM13138788

Questions Cloud

Problem related to full refund credit : Thomas Book Sales, Inc., supplies textbooks to college and university bookstores. The books are shipped with a proviso that they must be paid for within 30 days but can be returned for a full refund credit within 90 days.
Explain how a physical inventory count would differ : Explain how a physical inventory count would differ in a company using a perpetual inventory system versus one using a period inventory system.
Find probability that individuals clotting time will be more : The mean clotting time is 7.45 seconds with a standard deviation of 3.6 second. what is the probability that an individuals clotting time will be more than 4 seconds and less than 11?
How many grams of phosphorous will remain : Phosphorus-32 has a half-life of 14.0days . Starting with 4.00 g of 32p , how many grams will remain after 42.0 days?
What is the saving in materials usage cost : Drayton Company manufactures equipment used by construction companies. It currently produces a product with 30 parts, but redesign has reduced the number of parts to 9.
Neurology outpatients : You are the nurse in the neurology outpatients' clinic who sees Jake for a follow-up visit. It is now six months since Jake was diagnosed, and he is stable on medication with no more seizures.
Business of renting several apartment buildings : It has been determined that 2 tenants in $600 per month apartments and one tenant in the $1,000 per month apartment had not paid their December rent as of December 31st.
Derive equations whose solution yields maximum likelihood : Do you think they can be solved explicitly? Take the derivative of the gamma distribution and set it equal to zero and solve for alpha and beta to find the mle?
How much hcl are needed : Consider 2 Al + 6 HCl → 2 AlCl3 + 3 H2 , the reaction of Al with HCl to produce hydrogen gas. This reaction has a yield of 82.5 percent. How much HCl are needed to produce 14.0 L of H2 at 351 K and 1.11 atm ?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Basics of cumulative preferred stock

On January 2, 2007, Riley Corporation issued 20,000 shares of 6% cumulative preferred stock at $100 par value. On December 31, 2010, Riley Corporation declared and paid its first dividend.

  What potential ethics issues do you see in this situation

Which Statement(s) on Standards for Tax Services apply in this situation (explain how and why they apply)?

  Audit functions in your organization

Relate your explanation to the audit functions in your organization, or an organization with which you are familiar.

  Depreciation and journal entries

Compute the balance in the Accumulated Depreciation account at the end of 2013 using the straight-line method.

  Different types of dividends

What are the different types of dividends that corporations may issue? When should a corporation pay dividends? Would you prefer a stock dividend or a cash dividend? Why?

  Inventory management-order quantity for service level

Daily demand for a product is 100 units, with a standard deviation of 25 units. The review period is 10 days and the lead time is 6 days. At the time of review there are 50 units in stock.

  Interest charge-end of the grace period

If the unpaid balance on the above sale is $300 at the end of the grace period, the interest charge is:

  Journal entry for scrapping of jukebox

A rowdy spring break guest damages a jukebox that had been purchased in 1995 for $800. The jukebox had a useful of ten years, with an estimated salvage value of $75. The company decided to scrap the jukebox after the incident.

  Why would a publicly traded company prefer to pay

Why would a publicly traded company prefer to pay a newly acquired company in only stock, in only cash, or decide to use both?

  What would murphy corporation total estimated cost

Murphy Corporation has the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Murphy Corporation has decided to use a method of measuring cost functions called the high-low method in this situa..

  Calculate the cost per unit of cost driver for each cost

Pumpkin Bags (PB) is a desiger of high quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse.

  Why may companies seek to engage in business combinations

The core values for this course are integrity and excellence. Applying the values of integrity and excellence, discuss ethical considerations of accounting for business combinations in a manner that prevents misunderstanding in the questions below..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd