For many years, Yelena Company manufactured a single product called a Mono-Relay
ID: 2351376 • Letter: F
Question
For many years, Yelena Company manufactured a single product called a Mono-Relay. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called a Bi-Relay that has become increasingly popular. The Bi-Relay is a more complex product, requiring 1.00 hour of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The Mono-Relay requires only 0.50 hour of direct labor time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products on the basis of direct labor-hours.
Despite the growing popularity of the company
For many years, Yelena Company manufactured a single product called a Mono-Relay. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called a Bi-Relay that has become increasingly popular. The Bi-Relay is a more complex product, requiring 1.00 hour of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The Mono-Relay requires only 0.50 hour of direct labor time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products on the basis of direct labor-hours.
Despite the growing popularity of the company
Explanation / Answer
3. 1a. $643,200/(7000 hour + 9000 hours) = $40.20 per hour 1b. mono: 50 DM + .5*9 DL + .5*40.20 OH = $74.60 per unit bi: 65 DM + 1*9 DL + 1*40.20 OH = $114.20 per unit 4. 2. Activity rate: Maintaining inventory:88,000/1,100 = $80 per part types processing purchase orders: 199,200/3984 = $50 per purchase orders quality control: 299,000/14,950 = $20 per test run machine related: 57,000/1900 = $30 per machine hour 5. 3. a. mono: 400 parts*80 = 32000 3100 orders *50 = 155,000 5500 test runs*20 = 110,000 900 MH * 30 = 27,000 total = $324,000 324,000/18,000 = $18 per unit bi: 700 parts * 80 = 56,000 884 orders *50 = 44,200 9450 test runs*20 = 189,000 1000 MH * 30 = 30,000 total = $319,200 319,200/7,000 = $45.60 per unit b. unit product cost: mono: 50 DM * 4.50 DL + 18 OH = $72.50 bi: 65 DM + 9 DL +45.60 OH = $119.60
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