Homework Answers
| Requirement a. | |||
| Incremental Analysis | |||
| Sell (Unassembled bikes) | Process Further (Assembled bikes) | Net Income Increase (Decrease) | |
| Sales per unit | 450 | 495 | 45 |
| Cost per Unit: | |||
| Direct Materials | 150 | 155 | -5 |
| Direct Labor | 70 | 80 | -10 |
| Variable overhead (70% of direct labor) | 49 | 56 | -7 |
| Fixed overhead (30% of direct labor) | 21 | 21 | 0 |
| Total | 290 | 312 | -22 |
| Net Income per unit | 160 | 183 | 23 |
| Requirement b. | |||
| Speedy should process further as there is increase in net income. | |||
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30. Speedy Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled b...
Speedy Bikes could sell its bicycles to retailers either assembled or unassembled.
Speedy Bikes could sell its bicycles to retailers either assembled or unassembled. The cost of an unassembled bike is as follows:Direct materials $150Direct labor 70Variable overhead (70% of direct labor) 49Fixed overhead (30% of direct labor) 21Manufacturing cost per unit $290The unassembled bikes are sold to retailers at $400 each.Speedy currently has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity can be used to assemble the bikes and sell them at...
PROBLEM 1 A recent accounting graduate from Marvel State University evaluated the operating performance of Fanning...
PROBLEM 1 A recent accounting graduate from Marvel State University evaluated the operating performance of Fanning Company's four divisions. The following presentation was made to Fanning's Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by $60,000. (See analysis below.) Other Three Divisions Total Sales $2,000,000 $480,000 Southern Division $2,480,000 400,000 Cost of Goods Sold 950,000 1,350,000 Gross Profit 1,050,000 80,000 1,130,000 800,000 140,000 Operating Expenses...
King City Specialty Bikes (KCSB) produces high-end bicycles. Costs to manufacture and market the bicycles at...
King City Specialty Bikes (KCSB) produces high-end bicycles.
Costs to manufacture and market the bicycles at last year's volume
level of 1,800 bicycles per month are shown in the following table:
Variable manufacturing per unit $248.00 Total fixed manufacturing
$232,200 Variable nonmanufacturing per unit $54.00 Total fixed
nonmanufacturing $262,800 KCSB expects to produce and sell 2,100
bicycles per month in the coming year. The bicycles sell for $580
each. An outside contractor makes an offer to assemble 900 of
KCSB's...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at the company's volume of 2,000 units per month are shown in the following table. Unit manufacturing costs Variable costs $ 250 Fixed overhead 123 Total unit manufacturing costs $ 373 Unit nonmanufacturing costs Variable 70 Fixed 143 Total unit nonmanufacturing costs 213 Total unit costs $ 586 The company has the capacity to produce 2,000 units per month and always operates at full...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles...
King City Specialty Bikes (KCSB) produces high-end bicycles. The
costs to manufacture and market the bicycles at the company's
volume of 2,000 units per month are shown in the following
table.
The company has the capacity to produce 2,000 units per month
and always operates at full capacity. The bicycles sell for $600
per unit.
Required:
a. KCSB receives a proposal from an outside
contractor who will assemble 800 of the 2,000 bicycles per month
and ship them directly to...
The Big Wheels Company currently purchases bicycle seats for its bikes for $30 each. The company...
The Big Wheels Company currently purchases bicycle seats for its bikes for $30 each. The company has excess capacity and is considering the possibility of making the component. The Cost Accounting Department estimates that the following costs would be incurred to make each unit of the component: Direct materials $ 8 Direct labor 10 Variable overhead 8 Fixed overhead (depreciation, rent, insurance) 7 Total manufacturing cost $33 Additionally, if Big Wheels decides to make the component, additional foremen,...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at the company's volume of 2,000 units per month are shown in the following table: Unit manufacturing costs Variable costs $ 250 Fixed overhead 116 Total unit manufacturing costs $ 366 Unit nonmanufacturing costs Variable 70 Fixed 136 Total unit nonmanufacturing costs 206 Total unit costs $ 572 The company has the capacity to produce 2,000 units per month and always operates at full...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at the company's volume of 2,000 units per month are shown in the following table: Unit manufacturing costs Variable costs $ 250 Fixed overhead 117 Total unit manufacturing costs $ 367 Unit nonmanufacturing costs Variable 70 Fixed 137 Total unit nonmanufacturing costs 207 Total unit costs $ 574 The company has the capacity to produce 2,000 units per month and always operates at full...
King City Specialty Bikes (KCSB) produces high-end bicycles. Costs to manufacture and market the bicycles at...
King City Specialty Bikes (KCSB) produces high-end bicycles. Costs to manufacture and market the bicycles at last year's volume level of 2,000 bicycles per month are shown in the following table: Variable manufacturing per unit $253.00 Total fixed manufacturing $228,000 Variable nonmanufacturing per unit $63.00 Total fixed nonmanufacturing $278,000 KCSB expects to produce and sell 2,400 bicycles per month in the coming year. The bicycles sell for $600 each. An outside contractor makes an offer to assemble 700 of KCSB's...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at the company's volume of 2,000 units per month are shown in the following table. $240 120 $360 Unit manufacturing costs Variable costs Fixed overhead Total unit manufacturing costs Unit nonmanufacturing costs Variable Fixed Total unit nonmanufacturing costs Total unit costs 60 140 200 $560 The company has the capacity to produce 2,000 units per month and always operates at full capacity. The bicycles...
PROBLEM 1 A recent accounting graduate from Marvel State University evaluated the operating performance of Fanning Company's four divisions. The following presentation was made to Fanning's Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by $60,000. (See analysis below.) Other Three Divisions Total Sales $2,000,000 $480,000 Southern Division $2,480,000 400,000 Cost of Goods Sold 950,000 1,350,000 Gross Profit 1,050,000 80,000 1,130,000 800,000 140,000 Operating Expenses...
King City Specialty Bikes (KCSB) produces high-end bicycles.
Costs to manufacture and market the bicycles at last year's volume
level of 1,800 bicycles per month are shown in the following table:
Variable manufacturing per unit $248.00 Total fixed manufacturing
$232,200 Variable nonmanufacturing per unit $54.00 Total fixed
nonmanufacturing $262,800 KCSB expects to produce and sell 2,100
bicycles per month in the coming year. The bicycles sell for $580
each. An outside contractor makes an offer to assemble 900 of
KCSB's...
King City Specialty Bikes (KCSB) produces high-end bicycles. The
costs to manufacture and market the bicycles at the company's
volume of 2,000 units per month are shown in the following
table.
The company has the capacity to produce 2,000 units per month
and always operates at full capacity. The bicycles sell for $600
per unit.
Required:
a. KCSB receives a proposal from an outside
contractor who will assemble 800 of the 2,000 bicycles per month
and ship them directly to...
King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at the company's volume of 2,000 units per month are shown in the following table. $240 120 $360 Unit manufacturing costs Variable costs Fixed overhead Total unit manufacturing costs Unit nonmanufacturing costs Variable Fixed Total unit nonmanufacturing costs Total unit costs 60 140 200 $560 The company has the capacity to produce 2,000 units per month and always operates at full capacity. The bicycles...
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