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

Profi t Planning, SK 2 Chapter 10: Master budgeting Objective How organisat...

SK 2 Chapter 10: Master budgeting Objective How organisations strive to achieve their financial goals by preparing a number of budgets that together form an integrated business pla

The games economists play, THE GAMES ECONOMISTS PLAY It sounds like a s...

THE GAMES ECONOMISTS PLAY It sounds like a sports fan's dream.  In Stockholm on October 11th, three men share a $1m prize for their skill at analyzing games. They are not telev

What are the limitation of break even charts, Limitation of break even char...

Limitation of break even charts Despite many advantages a break even chart suffers from the following limitations: 1) A break even chart is based upon a number of assumption

Absorption cost-variable cost-transfer pricing methods, Absorption cost ...

Absorption cost Absorption, or full cost systems, transfer the full cost of the supplying department to the receiving department. Where a profit is to be allowed to the supplyi

Extensions to linear programming, Extensions to Linear Programming In man...

Extensions to Linear Programming In many real situations the solutions to linear programming models make sense only if they have integer values. Rounding off the linear programmi

The total cost accumulated in the assembly department, Kent Company had 800...

Kent Company had 800 units of product in its assembly department's work in process inventory at the starting of the period. During the period 3,000 additional units of product were

Explain the ratio analysis according to kosher, Explain the Ratio analysis ...

Explain the Ratio analysis according to kosher A ratio is the relation of the amount a to another b expressed as the ratio of a to b; a: b (a is to b) or a as simple fraction i

Strengths and weakness of net book value and paybac, Strengths and weaknes...

Strengths and weakness of net book value and pay back method

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