Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Managerial Accounting Expert

problem: Process Solutions provides a computer-based document processing service. The accountant has produced the following analysis.

 

Standard

Modified

Advanced

Sales quantity

1,000

1,100

1,200

Selling price

£5

£5

£6

Sales revenue

5,000

5,500

7,200

Labour hours

100

120

160

Labour cost @ £20/hour

2,000

2,400

3,200

Contribution

3,000

3,100

4,000

Contribution per unit sold

£3

£2.82

£3.33

 

The Sales Manager, whose team is paid a commission on sales revenue prefers to sell the higher priced Advanced service. This is also the preferred service for the Accountant, although not for the same reason, as her argument is that the Advanced service is better because of the higher contribution per unit sold. The Operations Manager argues that the Advanced Service consumes more labour hours than the Standard or Modified services and as labour availability limits his ability to process work, this should also be taken into account. The Operations Manager prefers the Standard or Modified service as this provides greater ability to use his capacity more flexibly. 

The General Manager has asked for your advice in relation to this disagreement within the management team. 

problem: Cowboy Constructions employs a full-time driver and incurs costs for a vehicle to deliver paperwork between each of their building sites. Select Couriers has offered to carry out the work to the same standard of service for a fixed sum of £2,000 per month. Cowboy’s annual costs are currently:

Salary and oncosts of driver              £16,000

Salary and oncosts of builder who

covers for sickness and annual leave

absences of driver                          £2,800

Depreciation of vehicle                   £2,500

Road tax, insurance & servicing      £1,000

Fuel                                            £3,000

Total                                          £25,300

 

If Cowboy uses Select Couriers, it will sell the vehicle for £2,000, and the driver’s employment will be terminated without any redundancy payment. The builder who covers for sickness and leave of the driver is currently replaced by casual labour which costs £3,500. 

What are the relevant costs involved in this decision? Should Cowboy sub-contract its delivery requirements to Select? What considerations are there in making this decision? 

problem: A spare parts supplier is thinking of building a car from the parts he has in his yard. He does not expect any reward for his labour but wants to know what costs he should include for the materials. He has provided the following information:

·    A chassis was bought for £100 and has no scrap value.

·   A reconditioned engine will cost £375. However, an old engine was bought for £50. It can either be sold in its present condition for £225 or additional parts costing £250 could be bought to bring to bring the engine to an equivalent standard to the reconditioned one.

·    Tyres costing £180 need to be purchased.

·    Paint is in stock at a cost of £60 but it will need to be replaced at its current price of £70. 

problem: Maximus Company has met all production requirements for the current month and has an opportunity to produce additional units of product with its excess capacity. Unit selling prices and unit costs for three models of one of its product lines are as follows. 

 

Plain model

Regular model

Super model

Selling price

£30.00

£32.50

£40.00

Direct material

£9.00

£10.00

£9.50

Direct labour (@ £5 per hour)

£5.00

£7.50

£10.00

Variable overhead

£4.00

£6.00

£8.00

Fixed overhead

£8.00

£7.50

£7.50

 

Variable overhead is applied on the basis of direct labour dollars, while fixed overhead is applied on the basis of machine hours. There is sufficient demand for the additional production of any model of the product line.

  1. If Maximus Company has excess machine capacity and can add more labour as needed (i.e. neither machine capacity nor labour is a constraint), which product is the most attractive to produce? Provide calculations and reasons to support your answer.
  2. If Maximus Company has excess machine capacity but a limited amount of labour time available, to which product or products should the excess production capacity be devoted? Provide calculations and reasons to support your answer.

Managerial Accounting, Accounting

  • Category:- Managerial Accounting
  • Reference No.:- M9278

Have any Question? 


Related Questions in Managerial Accounting

Denise ssn 182-90-0113 and marcus anders claim their two

Denise (SSN 182-90-0113) and Marcus Anders claim their two children, David (SSN 392-40-7417, age 7) and Stacy (SSN 813-20-4444, age 11) as dependents. During the year, Denise worked full-time and earned $38,200. Marcus w ...

Prepare a flexible budget for 20000 22000 and 24000 units

Prepare a flexible budget for 20,000, 22,000, and 24,000 units of output, using the information that follows. Variable costs: Direct materials $1.00 per unit Direct labor $4.00 per unit Variable overhead $8.00 per unit T ...

Payroll and payroll taxes the payroll of the rand company

Payroll and Payroll Taxes The payroll of the Rand Company on December 31 of the current year is as follows: 1) Total Payroll, $500,000 2) Payroll in excess of $100,000 to each employee, $350,000 3) Payroll in excess of $ ...

Ipe mba assignment question for managerial

IPE MBA Assignment Question for Managerial Accounting Question: Triton Corporation is a manufacturing company located in a country that has experienced rapid economic growth from the late 1990s to the early 2000s and the ...

Problem repair decisionclermont transit operates a summer

Problem : REPAIR DECISION Clermont Transit operates a summer ferry service to islands in the Ohio River. Farmers use the ferry to move farming equipment to and from the islands. Clermont's ferry is in need of repair. A n ...

You are thinking of buying biscos a preference share rs 100

You are thinking of buying BISCO's a preference share Rs 100 par value that will pay a dividend of 12 per cent perpetually. (a) What price should you pay for the preference share if you are expecting a return of 10 per c ...

Lucent technologiesrequired1 conduct a dupont decomposition

LUCENT TECHNOLOGIES REQUIRED 1. Conduct a DuPont decomposition of Lucent's ROE for each quarter of 1998, 1999 and 2000 (December 1999 is fiscal year 2000's first  quarter). What factors contributed to the differences in ...

Juniper company inc uses a perpetual inventory system the

Juniper Company, Inc. uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 26, it paid the ful ...

Question your role as an accountantprepare a job

Question :Your Role as an Accountant Prepare a job description that includes 3-4 typical duties of a managerial accountant. Identify the primary skills that managerial accountants need to be successful. Primary Task Resp ...

Write the given assignmentdraw accounting information

Write the given Assignment. Draw accounting information system. flowchart question is in the files attached along with one completed part of the flowchart! The sales process at S&S Electronics (a retail store) is as foll ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate