Chapter 11 Suzzi Boyles

8/3/2019 Chapter 11 Suzzi Boyles

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Cornerstone 11-1

1 Material usage cost reduction 320,000 320,000 x

Labor usage cost reduction 150,000 - 120,000 x

Purchasing cost reduction* [40,

2 New price = 9,000 - (499,375/64,000)

*Rounded to the nearest cent.

3

*Rounded to the nearest cent.


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20$ = 6,400,000$

15$ = 450,000$

000 +.75(30,000-17,500)] = 49,375$6,899,375$

= 8,892.20$


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Exercise 116

1 The Total product received is the computer (tangible) and service performance (intangi

2 Brand A is a cost leadership because they offer the same product as competitor at a lo

Brand B is a differentiation strategy because they increase the worth of what the custo

3 The possible sources for Jason purchasing from brand b would be the word of the sale


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Susan Boyles

le)

er price.

er gets by additional worth added to the product/service received

representative and the proof of an article in a magainze


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Exercise 117

1 The strategic plan used by the bank is focusing, because they are empahsiz

in and focusing on elements which the customers fall in.

2 Cost management

The cost management will assist the bank in determining the best and long term way to kee


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ing a market in which to compete

a comepitive edge by using cost data


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Exercise 118 Suzzi Boyles

a. number of plants Structural

b. number of moves Operational

c. degree of employee involvement Executional

d. Capacity utilization Executional

e. Number of product lines Structural

f. Number of distribution channels Executional Structional

g. Engineering hours Executional operational

h. Direct Labor Hours Operational

i. Scope Structural

j. Product configuration Executional

k. Quality management approach Executional

l. Number of receiving orders Operationalm. Number of defective units Operational

n. Employee experience Executional

o. Types of process technologies Structural

p. Number of purchase orders Operational

q. Type and efficiency of layout Executional

r. Scale Structural

s. Number of functional departments Executional Structional

t. Number of planning meetings Structural Executional


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Exercise 1115

1 Materials Inventory 486,000

Accounts Payable 486,000

Work-in-Process 81,000

Inventory 81,000

Overhead Control 405,000Accounts Payable 405,000

Work-in-Process 445,500Overhead Control 445,500

Finished Goods 1,012,500Work-in-Process 1,012,500

Cost of Goods Sold 1,012,500

Finished Goods 1,012,500

Overhead Control 40,500Cost of Goods Sold 40,500

2

Traditional


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Raw Material and in process Inventory 486,000

Accounts Payable 486,000

Combined in journal entry below

Conversion cost Control 526,500Wages Payable 445,500Accounts Payable 81,000

Finished Goods Inventory 1,012,500Raw Material and in process Inventory 486,000Conversion Cost Control 526,500

Cost of Goods Sold 1,012,500

Finished Goods Inventory 1,012,500

Conversion Cost Control 40,500Cost of Goods Sold 40,500

Backflush


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Problem 1119 5,000,000 +30X

1 Cost per labor hour 5,000,000 (30 x 200,000)

5,000,000 6,000,000 = 11,000,000

Cost per unit of average product =

2 Cost per hour =

Cost per unit of average product =

3 The design changes increased non-unit-based overhead activities, while

Setups:

Change in demand for setups

Change in resource spending =Receiving:

Change in demand for purchasing

Change in steps demanded =

Change in variable activity cost

Change in step-fixed cost

Total change =

Proble (Concluded)4 The cost of producing decreases by $250,000 for the rejected design:

Unit-level activities:


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Unit-level cost change

Setups:

Setup cost change

Receiving:

Purchasing demand change =

Decrease in steps =

Decrease in variable activity cost =

Decrease in step-fixed cost =

Total change


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ecreasing unit-based costs. This is suggested by the fact that engineering cha


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nge orders triggered a number of overhead-related activities such as changes i


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setup, inspection, and purchasing activities. Thus, so-called fixed overhead in


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creased by $1,600,000. Reduction in labor content may have come at the expen


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e of increasing the demand for non-unit-related activities. This is supported by


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he analysis of the effects of the design changes on setups and purchasing:


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Y = 5,000,000 +$30X, where x = direct labor hours.

Labor hours 200,000 from 250,000Hour per unit 1 from 1.5Fixed overhead 6,000,000 5,000,000

Activity Driver Part 1 normal Part 1 updatedDirect labor hoursNumber of setups

Receiving hours

Chapter 11 Suzzi Boyles

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