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

Controlling material flow , Controlling material flow Figure below out...

Controlling material flow Figure below outlines the progressive stages in purchasing, issuing and recording materials in a manufacturing concern. An efficient system of docume

Factory layout-jit features, Factory Layout The first stage of implemen...

Factory Layout The first stage of implementing the JIT manufacturing techniques is to rearrange the factory floor away from the batch production functional layout towards a pro

What is incremental budgeting, Incremental budgeting Incremental budget...

Incremental budgeting Incremental budgeting uses a budget prepared using a last period budget or actual performance as a base with incremental amount asses for the new budget p

Evaluate a proposed investment, Q. Evaluate a proposed investment? BMP ...

Q. Evaluate a proposed investment? BMP Consulting (BMPC) conducted an analysis of Delta Corp. and found that the firm consists of two different divisions: Pet Lovers, a pet sup

Complexities, major ways that these complexities might impact a business

major ways that these complexities might impact a business

Parameter prediction error-randomness of operating process, Parameter predi...

Parameter prediction error: This is another aspect of faulty planning. As Hongren says, ‘planning decisions are based on predictions of future costs, future selling price, fut

Homework.., given the above data what would the breakeven in units and doll...

given the above data what would the breakeven in units and dollars be if u wanted a necessary after tax profit of $ 36,000 (assume a 30% tax rate ) units __________ ales dollars _

Collection policy, Exact management of receivables acquires a suitable coll...

Exact management of receivables acquires a suitable collection policy that outlines the collection procedures. Collection policy consider as the procedure adopted through a firm to

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