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Submitted by jenyo2 on Mon, 2012-04-09 11:46
due on Mon, 2012-04-09 18:00
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Kingsport Containers, Ltd, of the Bahamas experiences wide variation in demand for the 200-liter steel drums it fabricates. The leakproof,...

Kingsport Containers, Ltd, of the Bahamas experiences wide variation in demand for the 200-liter steel drums it fabricates. The leakproof, rustproof steel drums have a variety of uses from storing liquids and bulk materials to serving as makeshift musical instruments. The drums are made to order and are painted according to the customer's specifications—often in bright patterns and de-signs. The company is well known for the artwork that appears on its drums. Unit product costs are computed on a quarterly basis by dividing each quarter's manufacturing costs (materials, labor, and overhead) by the quarter's production in units. The company's estimated costs, by quarter, for the coming year follow:

Quarter Direct materials $240,000 Direct labor Manufacturing overhead Total manufacturing costs $668,000 Number of units to be produced. Estimated unit product cost. . . .

First Second Third Fourth $240,000 128,000 300,000 $120,000 64,000 220,000 $60,000 32,000 1 80,000 $180,000 96,000 260,000 $668,000 $404,000 $272,000 $536,000 80,000 $8.35 40,000 $10.10 20,000 $13.60 60,000 $8.93 Management finds the variation in unit costs confusing and difficult to work with. It has been sug¬gested that the problem lies with manufacturing overhead because it is the largest element of cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing over¬head cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production. Required: 1. The company uses a job-order costing system. How would you recommend that manufactur¬ ing overhead cost be assigned to production? Be specific, and show computations. 2. Recompute the company's unit product costs in accordance with your recommendations in (1) above.

Answer
Submitted by Asma on Mon, 2012-04-09 13:16
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xxxxxx xxxx xxxxxxxx guided solution xxx you. This is xxx xxxx xxxxxxxx with different figures.Just follow xxx procedure and xxxxx xxxx xxxxxxxx

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Answer
Submitted by Asma on Tue, 2012-04-10 01:48
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xxxxxx find attached file for xxxxxxx figures.Thanks

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Quarter

First Second Third Fourth

Direct xxxxxxxxx . . x x x . . x x . . . xxxxxxxx $120,000 $60,000 $180,000 Estimated unit product cost x x . xxxxxx xxxxxx xxxxxx $8.93

Direct xxxxxx . x . . x x . x x . x . . x x xxxxxxxx xxxxxx xxxxxx xxxxxxx

xxxxxxxxxxxxx overhead . . x x . x 300,000 220,000 xxxxxxx xxxxxxxx

Total manufacturing costs x x x . xxxxxxxx xxxxxxxx $272,000 $536,000

xxxxxx xx units xx be xxxxxxxx . 80,000 xxxxxx xxxxxx xxxxxxx

Required:

1. How would xxx recommend xxxx xxxxxxxxxxxxx overhead cost xx xxxxxxxx xx xxxxxxxxxxx Be specific, xxx xxxx computations.

Solution:

xxx a pre-determined rate xxxxx on xxxxxx xxxxxx (either units. xxxx DMS)

xxx xxxx xxxxx manufacturing overhead yearly volume xxxxxxx

(MOH Rate based on xxxxx xx a xxxxxxx xx xxxxxxxx

xxx Rate x TMOH/Yearly xxxxxx $960,000 x xxxxxxx $4.80

xxx Rate x xxxxx xxxxxxxxxxxxx xxxxxxxx xxxxxx Volume xxxxxx

xxxx Rate xxxxx on DL$ xx a measure of xxxxxxxxx

xxx Rate - xxxxxxxxxxx Volume xxxxxxxx / 320,000 $3.00

xxx Rate = Total Manufacturing xxxxxxxx Yearly xxxxxx $1.60

xxxx xxxx

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