Bridgeton Industried dropped the muffler-exhaust systems product lin in the 1988
ID: 2565719 • Letter: B
Question
Bridgeton Industried dropped the muffler-exhaust systems product lin in the 1988 year-end. From 1988 to 1989 the total overhead costs declined by what percent?
Bridgeton Industries dropped the muffler-exhaust systems product line in the 1988 year-end. From 1988 to1989 the total direct lobar costs declined by what percentage?
Bridgeton Industries dropped the muffler-exhaust systems product line in the 1988 year-end. From 1988 to 1989 the both the total overhead costs and total direct labor costs declined, which caused the actual overhead per direct labor to be what in 1989? (percentage or ratio/level)
Exhibit 1:
MODEL YEAR
1987
1988
1989
1990
Sales
Fuel Tanks
$70,278
$75,196
$79,816
$83,535
Manifolds
79,459
84,776
89,323
93,120
Doors
41,845
45,174
47,199
49,887
Muffler/Exhausts
62,986
66,266
0
0
Oil Pans
75,586
79,658
0
0
Total
$330,154
$351,071
$216,338
$226,542
Direct Material
Fuel Tanks
$15,125
$15,756
$16,312
$16,996
Manifolds
31,696
33,016
34,392
35,725
Doors
14,886
15,506
16,252
16,825
Muffler/Exhausts
28,440
29,525
0
0
Oil Pans
32,218
33,560
0
0
Total
$122,365
$127,363
$66,956
$69,546
Direct Labor
Fuel Tanks
$4,169
$4,238
$4,415
$4,599
Manifolds
5,886
6,027
6,278
6,540
Doors
2,621
2,731
2,844
2,963
Muffler/Exhausts
5,635
5,766
0
0
Oil Pans
6,371
6,532
0
0
Total
$24,682
$25,294
$13,537
$14,102
Overhead by
Account Number
1000
$7,713
$7,806
$5,572
$5,679
1500
6,743
6,824
5,883
5,928
2000
3,642
3,794
2,031
2,115
3000
2,428
2,529
1,354
1,410
4000
8,817
8,888
7,360
7,433
5000
24,181
24,460
20,063
20,274
8000
5,964
5,946
3,744
3,744
9000
6,708
6,771
5,948
5,987
11000
5,089
5,011
3,150
3,030
12000
26,936
28,077
15,027
15,683
14000
9,733
9,784
8,025
8,110
Total
$107,954
$109,890
$78,157
$79,393
Factory Profit
$75,153
$88,524
$57,688
$63,501
Exhibit 2: Overhead Account Number
1000
Wages and benefits for nonskilled hourly personnel such as janitors and truck drivers.
1500
All plant salaried personnel expense, including benefits, except industrial engineers included in account number 11000 below.
2000
Production supplies such as gloves, safety goggles, and packing material.
3000
Small wearing tools such as grinding wheels, hammers, and screwdrivers.
4000
All purchased utilities, including coal and compressed gas.
5000
Wages for nonproduction employees with specialized skill classifications used for plant maintenance and rearrangement. The benefits associated with these wages are in class 14000 below.
8000
Depreciation on a straight-line basis and property taxes.
9000
Various relatively constant personnel-related expenses, including items such as training, travel, and union representation.
11000
Project expense for one-time setup and some rearrangement of new equipment and machinery.
12000
Benefits and overtime premium for production hourly workers, including COLA, state unemployment, and pension. Wages are in direct labor.
14000
Benefits for skilled hourly workers similar to those for production workers. Wages are in account 5000 above.
Exhibit 1:
MODEL YEAR
1987
1988
1989
1990
Sales
Fuel Tanks
$70,278
$75,196
$79,816
$83,535
Manifolds
79,459
84,776
89,323
93,120
Doors
41,845
45,174
47,199
49,887
Muffler/Exhausts
62,986
66,266
0
0
Oil Pans
75,586
79,658
0
0
Total
$330,154
$351,071
$216,338
$226,542
Direct Material
Fuel Tanks
$15,125
$15,756
$16,312
$16,996
Manifolds
31,696
33,016
34,392
35,725
Doors
14,886
15,506
16,252
16,825
Muffler/Exhausts
28,440
29,525
0
0
Oil Pans
32,218
33,560
0
0
Total
$122,365
$127,363
$66,956
$69,546
Direct Labor
Fuel Tanks
$4,169
$4,238
$4,415
$4,599
Manifolds
5,886
6,027
6,278
6,540
Doors
2,621
2,731
2,844
2,963
Muffler/Exhausts
5,635
5,766
0
0
Oil Pans
6,371
6,532
0
0
Total
$24,682
$25,294
$13,537
$14,102
Overhead by
Account Number
1000
$7,713
$7,806
$5,572
$5,679
1500
6,743
6,824
5,883
5,928
2000
3,642
3,794
2,031
2,115
3000
2,428
2,529
1,354
1,410
4000
8,817
8,888
7,360
7,433
5000
24,181
24,460
20,063
20,274
8000
5,964
5,946
3,744
3,744
9000
6,708
6,771
5,948
5,987
11000
5,089
5,011
3,150
3,030
12000
26,936
28,077
15,027
15,683
14000
9,733
9,784
8,025
8,110
Total
$107,954
$109,890
$78,157
$79,393
Factory Profit
$75,153
$88,524
$57,688
$63,501
Explanation / Answer
Answer Particulars 1988 1989 Decrease % Overhead Cost (A) 109890 78157 31733 28.87705888 Direct Labor Cost (B) 25294 13537 11757 46.48137898 Actual Overhead per direct labor for 1988 = 109890/25294 = 4.3445 Actual Overhead per direct labor for 1989 = 78157/13537 = 5.774 Actual overhead per direct labor increases by $1.4295 or 32.90%
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