Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) Curtis Corporation is beginning in manufacture Mighty Mint, new mouthwash in small spray container. Product will be sold to wholesalers and large drugstore chains in packages of 30 containers for $18 per package. Management assigns $200,000 of sited manufacturing overhead costs to Mighty Mint. Manufacturing cost per package of 30 containers of expected production of 100,000 packages is as follows;

Direct material

$6.50

Direct labor

3.5

Overhead (fixed and variable)

3

Total

$13.00

 

 

Model 501

Model 541

Model 599

Selling price

$5,000

$10,000

$13,000

Unit cost:

 

 

 

Material

1,050

4,500

6,000

Direct labor

500

2,000

4,000

Overhead

769

3,077

6,154

Unit profit (loss)

$2,681

$423

($3,154)

 Basically, all overhead costs are fixed. Some of fixed overhead costs are direct costs to particular models and others are common fixed costs.

Estimated total overhead

 

Model 501

Model 541

Model 599

Total

Direct fixed

$4,000,000

$1,500,000

$500,000

$6,000,000

Common fixed

 

 

 

4,000,000

Total

 

 

 

$10,000,000

Lennon allocates overhead costs to products using single overhead rate developed as follows. Estimated total overhead is divided by estimated direct labor cost. This results in overhead rate per labour dollar. This rate is used to allocate standard over-head to products. Below are estimates of sales and direct labour. These values simply the overhead rate of $1.5385 per labour dollar ($10,000,000 ÷ $6,500,000).

 

Model 501

Model 541

Model 599

Total

Estimated unit sales

1,000

2,000

500

3,500

Estimated labor

$500,000

$4,000,000

$2,000,000

$6,500,000

 Required

As it is showing loss, controller of Lennon has asked you to analyze whether Model 599 must be dropped. You must suppose that direct fixed costs will be avoided if model is dropped but common fixed costs will not be model is dropped.

describe why the method used to allocate costs at Lennon results in "unreasonably high" charges to the Model 599 pump.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M916400

Have any Question? 


Related Questions in Accounting Basics

Problem -using the following proforma information regarding

Problem - Using the following proforma information regarding GE, Inc. based on analysts' forecast in early 2016:   2016E 2017E Next 3 years EPS 1.29 1.56 Growth at 7.59% DPS 0.92 1.11 Growth at 10% The book value of GE's ...

The conference on evaluating capital projects has been very

The conference on evaluating capital projects has been very helpful. You have received a significant amount of information and multiple projects to evaluate to hone your skills. To adequately teach Grammy and the board y ...

Problem -a firm has the following probability distribution

Problem - A firm has the following probability distribution for annual losses due to vandalism. All amounts are before any tax consideration. The firm has a tax rate of 20%. Annual Losses Probability $ 0 .75 $ 4,000 .20 ...

Accounting case studyplease provide the answers to these

Accounting Case Study: Please provide the answers to these questions in the form of a paper. Please ensure the paper and all paper references are in APA format. CASE: Evaluating a Company's Budget Procedures. Tom Emory a ...

Assignment descriptiona manufacturing company is thinking

Assignment Description A manufacturing company is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including ...

Fifteen years ago dan bought a home and financed 150000

Fifteen years ago Dan bought a home and financed $150,000 with a 30-years mortgage at 8.2%. (a) find his monthly payment, the total amount of his payments, and the total amount of interest he will pay over the life of th ...

Discussionpart 1 please respond the following question no

Discussion Part 1 please respond the following question no less then 350 words (original work, no plagiarism, 1 reference "fairness of the federal estate tax and income and principal in fiduciary accounting" please respo ...

Consider that a company has excess cash flow google is a

Consider that a company has excess cash flow. Google is a good one to look at. Google invests in short term securities to earn something on the cash. What is another way the cash could be used to create wealth for the in ...

Discussionpart 1 please respond the following question no

Discussion Part 1 please respond the following question no less then 350 words (original work, no plagiarism, 1 reference "free cash-flow valuations" please respond to the following: • Create an argument that use of the ...

Cost benefit1 a cost-benefit analysis is a process by which

Cost Benefit 1. A cost-benefit analysis is a process by which business decisions are analyzed. The benefits of a given situation or business-related action are summed, and then the costs associated with taking that actio ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen