Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Management Expert

A.  Material Sampling -Analyzing Direct Material Costs

You are reviewing a cost proposal, which includes an $800,200 direct material estimate. After Initial examination of the proposal, you note that there are 500 material items, but you also note  that 20 high-cost items account for $620,000 of the total. The remaining $180,200 is spread across 480 relatively small purchases.

1. Examination of the 20 high-cost items (estimated at $620,000) shows that all are properly priced except one item. That item is overpriced by $20,000.  What must be your objective for these 20 items?

2. After analyzing the sample of the remaining 480 items, you find that the sample is overpriced by six percent. Using this six percent decrement factor, what cost must you compute for those items?  Remember that the average sample tern cost is 106 percent of what it ought to be.

3. Given your answers to problems 1 and 2, what should you estimate for total material cost? Mason Inventory- Analyzing Direct Material Costs. Given the following inventory data from Mason Corporation, what would be the inventory value Charged to job one (quantity of parts needed is 175) using FIFO, LIFO, and weighted average methods:
Receipt Date         Number of Units         Value             Extended Value
1/1/X I                       100                 $10.00             $1, 000
2/1/Xl                         50                 $11.00             $ 550
4/ 1/X1                       75                 $12.00             $ 900
6/1/X1                       150                 $13.00             $1, 950
9/1/X1                        75                 $14.00             $1,050
                                450                                      $5,450

1. What will be the inventory value charged using FIFO?

2. What wil be the inventory value charged using LIFO?

3. What will be the inventory value charged using weighted average?

You are preparing to negotiate with Far-Out Products for a contract to perform research and  development. For one work task, Far-Out is proposing 1800 labor hours and $80,000 of material. Both the technical analyst 2nd the auditor have examined the material cost. Both agree that there  is a relationship between labor hours and material cost. Both also agree in the accuracy of the  data below from recent similar projects (all data adjusted for inflation):

Project            Labor-Hours Expended         Material Dollars Expended

1                               1,000                            $ 50,000
2                               1,100                            $ 52,000
3                               1,900                            $ 74,000           
4                               2,000                            $ 73,500
5                               1900                             $ 74,400
Total                          7900                              323,900

1. Using the data, the auditor recommended a cost estimating relationship (CER) developed  using a simple average, $41 per labor hour ($323,900/7909). Using the auditor’s analysis,  what will you estimate of material cost for this task?

2. Using the same data, the technical analyst developed a CER using regression analysis.  The equation is $24,117 + ($25.74 x number of labor hours) with an R2 of .988. Using the analyst's analysis, is, what would be your estimate of material cost for the task?

3. Which estimate appears more accurate? Why?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91434

Have any Question? 


Related Questions in Financial Management

Super power company reported the following statistics in

Super Power Company reported the following statistics in its statements of income: Required a. Calculate the operating ratio and comment on the results. b. Calculate the times interest earned and comment on the results. ...

Eric and tammy feel like they will live in their home

Eric and Tammy feel like they will live in their home forever. They are considering refinancing their home. Eric and Tammy were told by a mortgage broker that they would qualify for a 3.8% rate on a 15 year or 4% on a 30 ...

Lonnie carson purchased royal oaks apartments two years ago

Lonnie Carson purchased Royal Oaks Apartments two years ago. An opportunity has arisen for Carson to purchase a larger apartment project called Royal Palms, but Carson believes that he would have to sell Royal Oaks to ha ...

The world income appreciation fund has current assets with

The World Income Appreciation Fund has current assets with a market value of $7.1 billion and has 535 million shares outstanding. What is the net asset value (NAV) for this mutual fund? (Round your answer to 2 decimal pl ...

Convertible debentures for kulik corporation were issued at

Convertible debentures for Kulik Corporation were issued at their $1,000 par value in 2012. At any time prior to maturity on February 1, 2032, a debenture holder can exchange a bond for 25 shares of common stock. What is ...

A a bond has a current yield of 9 and a yield to maturity

a) A bond has a current yield of 9% and a yield to maturity of 10%. Is the bond selling above or below par value? Explain. b) Now suppose the bond in the previous question is selling for 102. What is the bond's yield to ...

As an investment advisor for mreaf momentum real estate

As an investment advisor for MREAF (Momentum Real Estate Advisory Fund), you are about to make a presentation to the portfolio manager of the ET&T pension fund. You would like to show what would have happened had ET&T ma ...

1 you invest 25000 in t-bills and 50000 in the market

1. You invest $25,000 in T-bills and $50,000 in the market portfolio. If the risk free rate equals 2 percent and the expected market risk premium is 6 percent, what is the expected return on your portfolio? 2. The risk-f ...

Select one of the normative theories of business ethics

Select one of the normative Theories of Business Ethics (either Stockholder Theory, Stakeholder Theory or Social Contract Theory) and describe the basic tenets of the framework and explain how it can be applied. ?

A doggy day care center is replacing old equipment and

A doggy day care center is replacing old equipment and installing three new pieces of equipment for a total cost of $250,000, which will be depreciated using straight-­-line over four years. The new equipment will allow ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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