Ask Operation Management Expert

Douglas Davis, controller for Marston, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 2015:

Level of Activity

Driver: Direct Labor Hours

50,000

100,000

Direct materials

$ 300,000

$ 600,000

Direct labor

200,000

400,000

Depreciation (plant)

100,000

100,000

Subtotal

$ 600,000

$1,100,000

Driver: Machine Hours

200,000

300,000

Maintaining equipment

$ 360,000

$ 510,000

Machining

112,000

162,000

Subtotal

$ 472,000

$ 672,000

Driver: Material Moves

20,000

40,000

Moving materials

$ 165,000

$ 290,000

Driver: Number of Batches Inspected

100

200

Inspecting products

$ 125,000

$ 225,000

Total

$1,362,000

$2,287,000

 

During 2015, Marston worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred:

Direct materials $440000

direct labor $355000

depreciation  $100000

Maintaining equipment $425000

Machining  142000

Moving Materials 232500

inspecting products 160000

 

Marston applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates.

One of Marston's managers said the following: "Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the previous budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have four forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for five years, at $10,000 per year. Furthermore, for our two shifts, we need up to eight operators if we run all four forklifts. Each operator is paid a salary of $30,000 per year. Also, I know that fuel costs about $0.25 per move."

QUESTION:

Assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three resource items for 20,000 moves (Especially consider how activity-based budgeting may provide useful information for non-value-added activities.)

What is the cost per unit when there are 20000 moves?

What is the cost per unit when there are 40000 moves?

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M91407149
  • Price:- $30

Guranteed 24 Hours Delivery, In Price:- $30

Have any Question?


Related Questions in Operation Management

Conflictdefine functional versus dysfunctional conflict in

Conflict Define functional versus dysfunctional conflict in a work group and explain how you can increase functional conflict and decrease dysfunctional conflict. Develop a response that includes examples and evidence to ...

For this assignment you will need to find 2 articles in

For this assignment, you will need to find 2 articles in business that can help describe what are IT strategic initiative being undertaken by an organization are like. Choose a different organization for each of the arti ...

Coping with problems joe is a little nervous he has just

Coping With Problems Joe is a little nervous. He has just been transferred from another plant to take over a production line. Production is down and there is a serious problem with absenteeism. To make matters worse, the ...

Over 30 years ago michael porter identified a holistic

Over 30 years ago Michael Porter identified a holistic approach to understanding how competitive forces shape strategy. He posited that the only way to truly insulate an organization from underlying economic volatility i ...

You are the contracting officer for an air-to-ground

You are the contracting officer for an air-to-ground missile development program. A contract for pre-production models of the missile was awarded by your predecessor and the contractor is behind schedule. In a program me ...

The ikea case provides an excellent opportunity to apply

The IKEA case provides an excellent opportunity to apply strategic management concepts to a large privately-held company that is expanding into India. IKEA is a Netherlands-based Swedish company with a presence in 44 cou ...

Can you answer for me the following questions about social

Can you answer for me the following questions about social loafing and the three main causes of free-riding. 1. Give a description of the phenomenon of social loafing. 2. Give a description of the phenomenon of free-ridi ...

1 analyzing the bridgestonefirestone and ford motor company

1. Analyzing the Bridgestone/Firestone and Ford motor company, is it sufficient to use the ISO/QS 9000 standards as the main basis of vendor/product selection? 2. What position to these cars company ( 1. Volkswagen, 2. F ...

Research the effect of primary and secondary seat belt laws

Research the effect of primary and secondary seat belt laws on the occurrence of motor-vehicle injuries and fatalities. Explain how epidemiologic studies influenced the development of current seat belt laws. Describe how ...

Please provide a brief paragrap of the key takaways from

Please provide a brief paragrap of the key takaways from each of the following topics: Designing Clear Visuals in business reports Designing Successful Documents and Websites Writing Winning Proposals

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As