trident acc310 module 3 case & slp latest july 2016

Module 3 - Case

UNIT PRODUCT COST ANALYSIS

Case Assignment

Beautifully Fabulous Beauty Salon manufactures two products, Beauty Gloss and Cocooning Spray. Beauty Gloss is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Cocooning Spray. Beauty Gloss is the more complex of the two products, requiring 2.0 hours of direct labor time per unit to manufacture compared to 1.0 hour of direct labor time for Cocooning Spray. Beauty Gloss is produced on an automated production line.

Overhead currently is applied to the products on the basis of direct labor hours. The company estimated it would incur $510,000 in manufacturing overhead costs and produce 10,000 units of Beauty Gloss and 40,000 units of Cocooning Spray during the current year.

Unit costs for materials and labor are:

Cocooning Spray

Beauty Gloss

Direct material

$11

$24

Direct labor

6

12

The following items will be assessed in particular:

Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year.

The company is considering the use of activity-based costing as an alternative to its traditional costing method for manufacturing overhead. Data relating to the company's activity cost pools for the current year are given below:

Estimated

Expected Activity

Overhead

Cocooning

Beauty

Activity Cost Pool

Costs

Spray

Gloss

Total

Machine setups required

$204,000

800

1,600

2,400

Purchase orders issued

43,500

500

100

600

Machine-hours required

105,000

7,000

10,500

17,500

Maintenance requests issued

157,000

650

850

1,500

$510,000

Using the data above, determine the unit product cost of each product for the current year.

What items of overhead cost make Beauty Gloss so costly to produce according to the activity-based costing system? What influence might the activity-based costing data have on management's opinions regarding the profitability of Beauty Gloss?

Assignment Expectations

The submission should be 2 to 3 pages and need to include answers to all the questions listed above. Show computations, discuss the results and include references in APA format.

When your paper is done, send it in.

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Module 3 - SLP

UNIT PRODUCT COST ANALYSIS

The objective is for the student to become familiar with the various types of transactions that will impact the inventoriable and manufacturing overhead costs of the organization.

In Hershey’s 2007 annual report, http://library.corporate-ir.net/library/11/115/115590/items/283950/10K_Hershey[1].pdf, the management made this claim, “A decrease in inventories in 2007 reflecting lower raw material and goods in process inventories resulting from reduced manufacturing requirements and the global supply chain transformation program, in addition to lower finished goods inventories as a result of working capital improvement initiatives, partially offset by an inventory build in anticipation of the relocation of certain manufacturing processes under the global supply chain transformation program”

The following items will be assessed in particular:

Using Hershey’s inventory cost disclosed in the 2007 annual report, analyze and discuss the effect of the below economic events (a through j) on the financial statements: assume Hershey is a manufacturing firm that uses job-order costing. At the end of the 2007 year, the company's inventory balances were as follows:

Raw Materials

$199,460,000

Work (goods) in process

$ 80,282,000

Finished goods

$407,058,000

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 27,000 machine-hours and incur $189,000 in manufacturing overhead cost. The following transactions were recorded for the 2008 year:

Raw materials were purchased, $412,000.

Raw materials were requisitioned for use in production, $418,000 ($390,000 direct and $28,000 indirect).

The following employee costs were incurred: direct labor, $157,000; indirect labor, $70,000; and administrative salaries, $207,000

Selling costs, $99,000.

Factory utility costs, $13,000.

Depreciation for the year was $103,000 of which $95,000 is related to factory operations and $8,000 is related to selling and administrative activities

Manufacturing overhead was applied to jobs. The actual level of activity for the year was 26,000 machine-hours.

The cost of goods manufactured for the year was $747,000.

Sales for the year totaled $1,097,000 and the costs on the job cost sheets of the goods that were sold totaled $732,000.

The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.

You can assume that all transactions with employees, customers, and suppliers were conducted in cash.

SLP Assignment Expectations

The submission should be 2 to 3 pages and need to include answers to all the questions listed above. Show computations, discuss the results and include references in APA format.

When your paper is done, send it in.