Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 7, Problem 1P
The Sales Department of Minimus Inc. has
Materials used in production:
Direct labor hours required in production:
Prepare the following:
- a. A production budget for May.
- b. A direct materials budget for May.
- c. A direct labor budget for May.
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The cost formula for the maintenance department of Rambo Limited is $19,200 per month plus $7.50 per machine hour used by the
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Complete this question by entering your answers in the tabs below.
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Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used.
Maintenance cost
The controller of the
Stump
Company is preparing the budget for
2021
and needs to estimate a cost function for delivery costs. Information regarding delivery costs incurred in the prior 2 months are:
LOADING...
(Click
the icon to view the information.)
Requirements
1. Estimate the cost function for delivery.
2. Can the constant in the cost function be used as an estimate of fixed delivery cost per month? Explain.
Requirement 1. Estimate the cost function for delivery.
Delivery costs =
+ (
×
)
Delivery costs =
+ (
×
)
Requirement 2. Can the constant in the cost function be used as an estimate of fixed delivery cost per month? Explain.
The cost function in requirement 1 is an estimate of how costs behave
▼
outside of
within
the relevant range, not at cost levels
▼
outside
within
the relevant range. If there are no months with zero miles driven represented in the delivery cost…
Estimated sales in units
Selling price
Direct manufacturing labour-hours per
unit
Wage per direct manufacturing labour-
hour
January February
11,000
19,000
56.00 $
$
2.0
51.00 $
2.0
2022
March
6,000
51.00 $
1.0
April May
10,000
51.00 $
1.0
10,000
51.00
1.0
$ 10.00 $
10.00 $
10.00 $
11.00 $
Direct manufacturing labour-related costs include pension contributions of $0.50 per hour, workers' compensation insurance of
$0.15 per hour, employee medical insurance of $0.30 per hour, and employment insurance, in addition to wages. Assume that as
of January 1, 2022, the employment insurance rates are 7.5% of wages for employers and 7.5% of wages for employees. The cost
of employee benefits paid by McGrath for its employees is treated as a direct manufacturing labour cost.
11.00
The McGrath Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Martin Flack, the company controller, is
responsible for preparing the master budget and has accumulated…
Chapter 7 Solutions
Principles of Cost Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Explain zero-based budgeting and how it differs...Ch. 7 - Prob. 6QCh. 7 - Which operating budget must be prepared before the...Ch. 7 - Prob. 8QCh. 7 - Why is it important to have front-line managers...Ch. 7 - If the sales forecast estimates that 50,000 units...
Ch. 7 - What are the advantages and disadvantages of each...Ch. 7 - What three operating budgets can be prepared...Ch. 7 - Prob. 13QCh. 7 - What are the three budgets that are needed in...Ch. 7 - Why might Web-based budgeting be more useful than...Ch. 7 - What is a flexible budget?Ch. 7 - Why is a flexible budget better than a master...Ch. 7 - Why is it important to distinguish between...Ch. 7 - Why is the concept of relevant range important...Ch. 7 - In comparing actual sales revenue to flexible...Ch. 7 - How would you define the following? a. Theoretical...Ch. 7 - Is it possible for a factory to operate at more...Ch. 7 - If a factory operates at 100% of capacity one...Ch. 7 - How is the standard cost per unit for factory...Ch. 7 - When allocating service department costs to...Ch. 7 - The sales department of Macro Manufacturing Co....Ch. 7 - The sales department of F. Pollard Manufacturing...Ch. 7 - Barnes Manufacturing Co. forecast October sales to...Ch. 7 - Prepare a cost of goods sold budget for the Crest...Ch. 7 - Prepare a cost of goods sold budget for MacLaren...Ch. 7 - Roman Inc. has the following totals from its...Ch. 7 - Starburst Inc. has the following items and amounts...Ch. 7 - Using the following per-unit and total amounts,...Ch. 7 - Cortez Manufacturing, Inc. has the following...Ch. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Calculating factory overhead The normal capacity...Ch. 7 - The Sales Department of Minimus Inc. has forecast...Ch. 7 - Sales, production, direct materials, direct labor,...Ch. 7 - Budgeted selling and administrative expenses for...Ch. 7 - Prob. 4PCh. 7 - Selling and administrative expense budget and...Ch. 7 - Preparing a flexible budget Use the information in...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Flexible budget for factory overhead Presented...Ch. 7 - Prob. 10PCh. 7 - Overhead application rate Creole Manufacturing...Ch. 7 - Overhead application rate Roll Tide Manufacturing...Ch. 7 - Flexible budgeting, performance measurement, and...
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