Exam 6: Planning in the Product Domain

Joyce Company is a printing shop that offers products including brochures, advertising flyers, wedding invitations, etc. The company has accepted an order from Jane Anderson for wedding invitations. The job will require 200 sheets of card stock at $0.15 per sheet and $30 worth of various inks. The job will also require two hours of direct labor time at $15 per hour. Overhead is applied on the basis of direct labor using a plant-wide rate of $20 per hour. -What is the prime cost of the wedding invitations ordered by Jane Anderson?

The sum of direct material and direct labor costs traceable to a specific job or batch is termed:

Colt Company uses a weighted average process cost system to account for the cost of producing a chemical compound. As part of production, Material B is added when the goods are 80% complete. Beginning work-in-process inventory for the current month was 20,000 units, 90% complete. During the month, 70,000 units were started in process, and 65,000 units were completed. There were no lost or spoiled units. If the ending inventory was 60% complete, the total equivalent units for Material B for the month was:

Charlton Woodworking, Inc., specializes in custom restoration of antique furniture. The company costs work using a job order costing system and applies overhead using a single plant-wide rate based on direct labor hours. For the coming year, estimated total overhead for the firm is $275,000 and estimated direct labor hours are 5,000. Required: a. What is the predetermined overhead rate that will be used to apply overhead to individual restoration jobs? b. Charlton Woodworking recently completed a restoration for Victoria's Corner that required 18 hours of direct labor time. What amount of overhead will be charged to this job?

The objective of target costing's pricing analysis is to establish a price for the product or service that will maximize its profit potential.

Waller Co. uses a weighted average process costing system. Material B is added at two different points in the production of shirms, 40% is added when the units are 20% completed, and the remaining 60% of Material B is added when the units are 80% completed. At the end of the quarter, there are 22,000 shirms in process, all of which are 50% completed. With respect to Material B, the ending shirms in process represent how many equivalent units?

Retro Autoparts, Inc., is a metalworking shop that manufactures exact replacement parts for vintage automobiles. All work is done on a special order basis. The business may best be described as:

Colt Company uses a weighted-average process cost system to account for the cost of producing a chemical compound. As part of production, Material B is added when the goods are 80% complete. Conversion costs are incurred evenly throughout the production process. Beginning work-in-process inventory for the current month was 20,000 units, 90% complete. During the month, 70,000 units were started in process, and 65,000 units were completed. There were no lost or spoiled units. The ending inventory was 60% complete. Required: Compute the equivalent units for material and conversion that will be used to assign for the current month.

Joyce Company is a printing shop that offers products including brochures, advertising flyers, wedding invitations, etc. The company has accepted an order from Jane Anderson for wedding invitations. The job will require 200 sheets of card stock at $0.15 per sheet and $30 worth of various inks. The job will also require two hours of direct labor time at $15 per hour. Overhead is applied on the basis of direct labor using a plant-wide rate of $20 per hour. -What amount of overhead will be applied to the wedding invitations ordered by Jane Anderson?

International Chemicals, Inc., is in the design phase of a new additive that will improve the adhesion of exterior house paint. The market for such additives is extremely competitive and International has determined that its selling price cannot exceed $20 per unit. At this price, the company has determined that a cost gap of $8 per unit exists. To proceed from the design to the attainment phase for this additive, International Chemicals will:

Olsen Company processes lumber into a product called medium density fiberboard. The manufacturing process runs on a 24/7 clock. For the month of February, it had 40,000 square feet of medium density fiberboard in process at the beginning of the month. Another 180,000 square feet were put into process during February, and 60,000 square feet remained in process at the end of February. - All raw material is added at the beginning of the process while conversion costs are added uniformly throughout the production process. The ending work-in-process inventory of 60,000 units was 40% complete for conversion at the end of February. What are the equivalent units of production for conversion in February?

Young Corporation is in the design phase for a voice-activated remote control for home electronic devices. Its market analysis indicates that the planned device can be sold at a price of $150 per unit. The company has determined that a 30% profit on the product will allow it to recover the costs of development and production, and provide an adequate return on capital. Under these circumstances, the target cost for the remote control is:

The 195 Factory, Inc., produces replacement parts for Cessna aircraft. The company employs a job order costing system with a plant-wide overhead rate based on direct labor hours. For the current year, estimated overhead is $800,000. The company employs five direct laborers, each of whom was expected to work 2,000 hours in the current year. The 195 Factory has just completed production of a replacement aileron assembly for Fortune Air Flying Club. This job required 12 hours of direct labor time to complete. What amount of overhead cost will be applied to the Fortune Air Flying Club job?

The difference between the target price of a product and its target cost is:

Price Company produces grape juice in a continuous process that is sold to wineries. The company employs a weighted average process costing system. Data concerning activity in January at the company are given in the table below. - A total of 40,000 completed units were transferred out to finished goods during January. The total cost of the completed units is:

Price Company produces grape juice in a continuous process that is sold to wineries. The company employs a weighted average process costing system. Data concerning activity in January at the company are given in the table below. - A total of 40,000 completed units were transferred out to finished goods during January. The total cost of the ending work-in-process is:

In a process costing environment, the number of physical units of output completed in a given period is identical to the number of equivalent units of output attributed to that period.

San Jose Inc. uses a weighted average process costing system. All materials are introduced at the start of manufacturing, and conversion cost is incurred evenly throughout production. The company started 70,000 units during May and had the following work-in-process inventories at the beginning and end of the month. May 1 30,000 units, 40% complete May 31 24,000 units, 25% complete Assuming no spoilage or defective units, the total equivalent units used to assign costs for May are:

The Wingo Corporation estimates that it can successfully market a new water toy at a price of $40 per unit. Its analysis also indicates an estimated actual cost to produce the new toy of $36 per unit. At this point, a cost gap of $8 exists. What rate of profit does Wingo require for this product?

Woodford Company has established a target price for a new product at $250. The company has determined that it must earn a desired profit of 30% on the product. The target cost for the product is $175.