traditional cost accounting methods are misleading where there is diversity in the no of products manufactured. The case highlights the importance of Process-Oriented Costing approach. The cost structure of the firm suggests that the production related and support related overheads form 33.0 and 26.0 percent of total costs. Since the firm manufactured almost 10,000 different types of motors, allocation of support related overhead costs can be crucial for the operation of the firm. Table 1. Cost of base
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planning and estimating future expenditure. * It establishes a link between decision-making and cost behavior. * It encourages a critical review of processes related to activities by exposing true cost, and facilitates cost cutting. * It is likely to give a more accurate estimate of product costs especially in multi-product, diverse organizations. * It utilizes unit cost rather than just total cost. * It integrates well with Six Sigma and other continuous improvement programs. Disadvantages
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Acquisition cost of an item of purchased equipment means the net invoice unit price of the property including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the property usable for the purpose for which it was acquired. Other charges such as the cost of installation, transportation, taxes, duty or protective in-transit insurance, shall be included or excluded from the unit acquisition cost in accordance with the grantee's regular accounting practices.
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Mueller-Lehmkuhl GmbH Mueller-Lehmkuhl (ML) was a German producer of apparel fasteners. Apparel fasteners are used in the garment industry. ML had been producing apparel fasteners since the late 19th century. In recent years, they had achieved technological superiority which resulted in high margins for their products. ML valued reliability of their products and fast service to their customers. However, competition and domestic market saturation in the 1980s led ML to a crossroads
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attractive financial benefits? Financially I would say Yangtze would be the most attractive. You have the ability to produce a very minimal order volume (compared to competitors) at significantly less cost. To test the market in the early stages this would be the cheapest option. If the product fails less costs would have been incurred. 2. What are the complications and benefits associated with entering into a contract to manufacture Dry Goods outside the United States? There are language and cultural
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Homework Chapter 3 # 13 Required: a. Calculate the cost per equivalent unit for materials & conversion costs. Materials = $446,970 / (45,000 + 2,550)= $9.40 Conversion Cost = $407,880 / (45,000 + 1,350) = $8.80 b. Calculate the cost of items completed during November. 45,000 x $18.20 = $ 819,000… $18.20 came by adding $9.40 + 8.80 c. Calculate the cost of ending Work in Process Material Cost: (2,550 x $9.40) = $23,970 Conversion: (1,350
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EXHIBIT 1 | | | | | | Total | Valves | Pumps | Flow Controllers | Manufacturing Costs | | | | | Material Cost per Unit | | $ 16 | $ 20 | $ 22 | Units/Month | | 7,500 | 12,500 | 4,000 | Material Cost per Month | | 120,000 | 250,000 | 88,000 | | | | | | Labor Unit Cost | | | | | Production Runs per Month | | 1 | 5 | 10 | Set-up Labor Hrs/Prod. Runs | | 8 | 8 | 12 | Run Labor Hrs/Unit | | 0.25 | 0.5
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released for sale. Using the single-cavity mould, monthly production capacity is about 40,000 units. Ken wishes to maintain a minimum of 10,000 units inventory; however, if inventory exceeds 10,000 units, warehouse space would have to be rented at a cost of $200 per month. The warehouse space has a capacity of 35,000 units and can be leased on a monthly basis; no annual lease is required. Lease payments are due the month following the actual lease. Perfect Plastics requires production runs of at
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businesses that provide a broad range of products, including components, products, systems and subsystems, and related services to military and commercial customers in several niche markets. L-3 Communications was awarded a $25,683,928 cost-plus-award-fee and cost-plus-fixed-fee contract. This contract modification is for the Modernized User Equipment (MUE) completion effort (L-3 communication, 2011; 10k). This effort corrects MUE receiver card deficiencies that were identified during Functional
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CHAPTER 4 ACTIVITY-BASED COSTING CHAPTER REVIEW UNIT COSTS 1. Functional-based and activity-based costing assigns costs to cost objects such as products and customers. Once costs are assigned to the cost object, the unit cost is calculated by dividing the total cost assigned to the units produced by the number of units produced. 2. Unit cost information is used to: ■ value inventory ■ determine cost of goods sold, which affects income ■ determine bids to give to potential
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