Calculate the direct materials costs, Managerial Accounting

Assignment Help:

XYZ Industries manufactures electronic testing equipment. XYZ also installs the equipment at customers' sites and ensures that it functions smoothly. Additional information on the Manufacturing and Installation departments is as follows (capacities are expressed in terms of the number of units of electronic testing equipment):

                                                                  Equipment                   Equipment

                                                                  Manufactured             Installed             

 

Annual capacity                                          400 units per year        300 units per year

Equipment manufactured and installed          300 units per year        300 units per year

 

XYZ manufactures only 300 units per year because the Installation Department has only enough capacity to install 300 units. The equipment sells for $40,000 per unit (installed) and has direct materials costs of $15,000. All costs other than direct materials costs are fixed. The following requirements refer only to the preceding data. There is no connection between the requirements.

REQUIRED

1. XYZ's engineers have found a way to reduce equipment manufacturing time. The new method would cost an additional $50 per unit and would allow XYZ to manufacture 20 additional units a year. Should XYZ implement the new method? Show your calculations.                                                    

2. XYZ's designers have proposed a change in direct materials that would increase direct materials costs by $2,000 per unit. This change would enable XYZ to install 320 units of equipment each year. If XYZ makes the change, it will implement the new design on all equipments sold. Should XYZ use the new design? Show your calculations.

3. A new installation technique has been developed that will enable XYZ's engineers to install 10 additional units of equipment a year. The new method will increase installation costs by $50,000 each year. Should XYZ implement the new technique? Show your calculations.                                           

4. XYZ is considering how to motivate workers to improve their productivity (output per hour). One proposal is to evaluate and compensate workers in the Manufacturing and Installation departments on the basis of their productivities. Do you think the new proposal is a good idea? Explains briefly.


Related Discussions:- Calculate the direct materials costs

Explain zero bases budgeting according to david humdinger, Explain Zero bas...

Explain Zero bases budgeting According to David humdinger According to David humdinger, ZBB is a management tool which provides a systematic method for evaluating all operation

Budget, advantage and disadvantage of incremental budget

advantage and disadvantage of incremental budget

Case Study, Can someone do my case study for managerial accounting includin...

Can someone do my case study for managerial accounting including writing a sales report?

Cost, Stellar Packaging Products and its primary customer, Estrella Coffee,...

Stellar Packaging Products and its primary customer, Estrella Coffee, are deciding on appropriate costing systems for their operations. Stellar Packaging Products’ manufacturing is

What is period cost, What is period cost Period costs are those costs w...

What is period cost Period costs are those costs which are reported as expanses of the period in question. These are cost which are not assigned to the product but are charged

Prepare a revised performance report, Yuma foods acquire Aldo's tortillas s...

Yuma foods acquire Aldo's tortillas several years ago. Aldo's continued to operate as an independent company, except that Yuma foods has exclusive authority over capital investment

Standard costing system, Standard costing system However, it has been a...

Standard costing system However, it has been argued that traditional variance analysis is unhelpful and potentially misleading in the modern organization, and can make managers

What are the principles of management accounting, What are the Principles o...

What are the Principles of management accounting? 1. The procedures and methods to be followed for keeping and analyzing financial statements should have consistency. It enable

Write Your Message!

Captcha
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