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

Imposed budgets- budgetary styles, Imposed Budgets In this approach to ...

Imposed Budgets In this approach to budgeting, top management prepares a budget with little or no help from operating personnel, which is then obligatory upon the employees who

Traditional and activity based costing, Explain what is meant by traditiona...

Explain what is meant by traditional costing system. Support with example.

Predetermined Overhead, SSI, a meat/burger/chicken processing manufacturing...

SSI, a meat/burger/chicken processing manufacturing plant loacted in Idaho, USA prepares

Management, Discuss the different roles played by the qualitative and quant...

Discuss the different roles played by the qualitative and quantitative approaches to managerial decision making

Dynamic programming, Dynamic programming It is an extension which finds...

Dynamic programming It is an extension which finds solutions to problems involving a number of decisions which have to be made sequentially. For example, the amount of a produc

Determine the current ratio - liquidity ratios, Current ratio Meaning:...

Current ratio Meaning: this ratio establishes a relationship among current assets and current liabilities. Objective: the objective of computing these ratios is to calcu

Value added statements, VALUE ADDED STATEMENTS Are intended to show how...

VALUE ADDED STATEMENTS Are intended to show how much wealth or value has been created by the company’s operations and how the wealth has been shared out to interested groups e.

Incremental budgeting, the suitability of incremental budgeting to a stable...

the suitability of incremental budgeting to a stable and static environment

Explain the interpretation of equity ratio, Interpretation of equity ratio ...

Interpretation of equity ratio As equity ratio show the relationship of owner funds to total assets higher the ratio or the share of the shareholders in the total capital of th

Model construction, Model Construction The success of a simulation exer...

Model Construction The success of a simulation exercise is related to the predictive quality of the underlying model, so that considerable care should be taken with model const

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