NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold Selling price Variable production cost Variable selling cost Allocated fixed production cost 100,000 units $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit O. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce all of the part A15 requested by the Business Products Division, what would be the minimum transfer price they should be willing to accept assuming there would be no impact to their fixed cost? A. $[ per unit

NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold Selling price Variable production cost Variable selling cost Allocated fixed production cost 100,000 units $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit O. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce all of the part A15 requested by the Business Products Division, what would be the minimum transfer price they should be willing to accept assuming there would be no impact to their fixed cost? A. $[ per unit

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...

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Southward Company has implemented a JIT flexible manufacturing system. John Richins, controller of the company, has decided to reduce the accounting requirements given the expectation of lower inventories. For one thing, he has decided to treat direct labor cost as a part of overhead and to discontinue the detailed direct labor accounting of the past. The company has created two manufacturing cells, each capable of producing a family of products: the radiator cell and the water pump cell. The output of both cells is sold to a sister division and to customers who use the radiators and water pumps for repair activity. Product-level overhead costs outside the cells are assigned to each cell using appropriate drivers. Facility-level costs are allocated to each cell on the basis of square footage. The budgeted direct labor and overhead costs are as follows: The predetermined conversion cost rate is based on available production hours in each cell. The radiator cell has 45,000 hours available for production, and the water pump cell has 27,000 hours. Conversion costs are applied to the units produced by multiplying the conversion rate by the actual time required to produce the units. The radiator cell produced 81,000 units, taking 0.5 hour to produce one unit of product (on average). The water pump cell produced 90,000 units, taking 0.25 hour to produce one unit of product (on average). Other actual results for the year are as follows: All units produced were sold. Any conversion cost variance is closed to Cost of Goods Sold. Required: 1. Calculate the predetermined conversion cost rates for each cell. 2. Prepare journal entries using backflush accounting. Assume two trigger points, with completion of goods as the second trigger point. 3. Repeat Requirement 2, assuming that the second trigger point is the sale of the goods. 4. Explain why there is no need to have a work-in-process inventory account. 5. Two variants of backflush costing were presented in which each used two trigger points, with the second trigger point differing. Suppose that the only trigger point for recognizing manufacturing costs occurs when the goods are sold. How would the entries be listed here? When would this backflush variant be considered appropriate?
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A new product Zico was recently introduced by Philadelphia Co., in order to complement its other products, Novo and Domo. The accountant used to allocate the indirect cost according to the units produced. With the recent addition of an expanded computer system, Sonata would like to investigate the possibility of implementing ABC. Before making a final decision, management has come to you for advice. You collected the following information regarding manufacturing overhead: Table (1) Mfg. Overhead Mfg. Overhead Allocation bases Costs $ 40,000 $ 45,000 $ 9,000 $ 21,000 Number of set-ups Set-up Ordering materials Handling materials Inspection Number of material orders Number of times material was handled Number of inspection hours $115,000 Table (2) Products Activity Zico Novo Domo Total Number of set-ups 5 20 55 Total Number of material orders 1 2 7 Total Number of times material was handled 1 17 Total Number of inspection hours Number of units produced 3 10 6,000 3,000 1,000 Required: 1.…
NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold 100,000 units Selling price Variable production cost Variable selling cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit per unit $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit Q. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce…
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