Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 23
1417
Exercise 23–15 (15 minutes)
a.
Time charge per hour of direct labor
Direct labor rate per direct labor hour …………………………...
$30
Non-materials related overhead per direct labor hour …….
15
Total hourly conversion cost …………………………………………
9
Time charge per hour of direct labor ……………………………..
$54
b.
Materials markup per dollar of direct materials cost
Materials-related overhead…………………………………………….
5%
Materials markup …………………………………………………………..
c.
Time and Materials Price Quote
Direct labor ($54 x 4 hours) …………………………………………..
$216
Direct materials …………………………………………………………..
580
PROBLEM SET A
Problem 23-1A (20 minutes)
Part 1
Cost per unit
Make with
Method 1
Make with
Method 2
Direct materials ……………………………..
$ 5
$ 5
Overhead (incremental) ………………….
Part 2
Make Part.
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 23
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Problem 23-2A (20 minutes)
Part 1
Scrap, Recycle or Rework Analysis
Scrap
Recycle
Rework
Revenue from scrap/recycle/rework …………..
$18,000
$36,000
$135,000
Problem 23-3A (40 minutes)
Part 1
Product Contribution Margin
Standard
Deluxe
Selling price per unit ……………………………………
$120
$160
Variable costs per unit …………………………………
Machine hours per unit ………………………………..
Part 2
SALES MIX RECOMMENDATION. To the extent allowed by production and market
constraints, the company should produce as much of the Standard model as
possible because its contribution margin is higher. With capacity of 176
machine hours per month, the company should produce:
CONTRIBUTION MARGIN AT RECOMMENDED SALES MIX
Sales Mix
Contribution
Margin
Machine
Hours Used
Standard (176 units x $80 per unit) …………
$14,080
176
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 23
1421
Problem 23-3A (continued)
Part 3
SALES MIX RECOMMENDATION WITH LIMITED DEMAND. If demand for the Standard
model is limited to 100 units, the company will make 100 units of the
CONTRIBUTION MARGIN AT RECOMMENDED SALES MIX
Sales Mix
Contribution
Margin
Machine
Hours Used
Standard (100 units x $80 per unit) …………
$ 8,000
100
Problem 23-4A (45 minutes)
Part 1
❶ Determine total cost per unit
Per Unit
Product costs
Direct materials ………………………………….
$230
❷ Determine dollar markup per unit
Total cost per unit …………………………………
$320
Markup percentage (given) ……………………
❸ Determine selling price per unit
Total cost per unit …………………………………
$320
Part 2
Per Unit
Expected selling price …………………………..
$ 800
1423
Problem 23-4A (continued)
Part 3
① Determine variable cost per unit
Variable Cost per Unit
Direct materials ……………………………………………
$230
Direct labor ………………………………………………….
10
② Determine dollar markup per unit
Variable cost per unit ……………………………………
$280
Markup percentage (given) …………………………..
③ Determine selling price per unit
Variable cost per unit ……………………………………
$280
Problem 23-5A (20 minutes)
Part 1
SPECIAL OFFER ANALYSIS
Per Unit
Total
Sales (50,000 units) ……………………………………….
$3.20
$160,000
Variable costs
Direct materials …………………………………………..
1.44
72,000
Part 2
Accept Special Offer. The company should accept the special offer
because its income increases by $26,000.
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 23
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Problem 23-6A (20 minutes)
Part 1
SPECIAL OFFER ANALYSIS
Per Unit
Total
Sales (10,000 units) …………………………………
$42.00
$420,000
Variable costs
Direct materials …………………………………….
20.00
200,000
Part 2
Reject Special Offer. The company should reject the special offer
PROBLEM SET B
Problem 23-1B (20 minutes)
Part 1
Cost per unit
Make with
Method 1
Make with
Method 2
Direct materials …………………………..…
$1.20
$1.20
Overhead (incremental) ………………….
Part 2
Buy Part.
Explanation: The company should buy the part because its cost is lowest.
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 23
1427
Problem 23-2B (20 minutes)
Part 1
Scrap, Recycle or Rework Analysis
Scrap
Recycle
Rework
Revenue from scrap/recycle/rework …………..
$3,750
$6,500
$25,000
Part 2
Rework Units. The company should rework the telescopes to be good
Problem 23-3B (40 minutes)
Part 1
Product Contribution Margin
Standard
Pro
Selling price per unit ……………………………………
$60
$80
Variable costs per unit …………………………………
20
30
Machine hours per unit ………………………………..
Part 2
SALES MIX RECOMMENDATION To the extent allowed by production and market
constraints, the company should produce as much of the Standard model as
possible because it has the higher contribution margin per machine hour. With
CONTRIBUTION MARGIN AT RECOMMENDED SALES MIX
Sales Mix
Contribution
Margin
Machine
Hours Used
Standard (200 units x $40 per unit)………….
$8,000
200
Part 3
SALES MIX RECOMMENDATION If demand for the Standard model is limited to
CONTRIBUTION MARGIN AT RECOMMENDED SALES MIX
Sales Mix
Contribution
Margin
Machine
Hours Used
Standard (180 units x $40 per unit)………….
$7,200
180
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 23
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Problem 23-4B (45 minutes)
Part 1
❶ Determine total cost per unit
Per Unit
Product costs
Direct materials ………………………………………….
$ 285
Direct labor ………………………………………………..
Fixed overhead …………………………………………..
Selling, general and administrative costs
❷ Determine dollar markup per unit
Total cost per unit ……………………………………….
$ 360
Markup percentage (given) ………………………….
❸ Determine selling price per unit
Total cost per unit ……………………………………….
$ 360
Part 2
Per Unit
Expected selling price …………………………………
$1,000