Even complicated and confusing topics will be easily developed and covered if you request our help writing an essay. Place an order today!

Assignment 2: Calculating Cost

Ontario, Inc. manufactures two products, Standard and Enhanced, and applies overhead on the basis of direct-labor hours. Anticipated overhead and direct-labor time for the upcoming accounting period is $800,000 and 25,000 hours, respectively. Information about the company's products follows.

  Standard: Enhanced:

Estimated production volume

 3,000 units 4,000 units

Direct-material cost

 $25 per unit $40 per unit

Direct labor per unit

3 hours at $12 per hour 4 hours at $12 per hour

Ontario's overhead of $800,000 can be identified with three major activities: order processing ($150,000), machine processing ($560,000), and product inspection ($90,000). These activities are driven by number of orders processed, machine hours worked, and inspection hours, respectively.

Data relevant to these activities follow:

  Orders Processed Machine Hours Worked Inspection Hours

Standard

300 18,000 2,000

Enhanced

 200 22,000 8,000

Total

500 40,000 10,000

Top management is very concerned about declining profitability despite a healthy increase in sales volume. The decrease in income is especially puzzling because the company recently undertook a massive plant renovation during which new, highly automated machinery was installed—machinery that was expected to produce significant operating efficiencies.

Using a Microsoft Excel format for calculations, complete the following:

  • Assuming use of direct-labor hours to apply overhead to production, calculate the unit manufacturing costs of the standard and enhanced products if the expected manufacturing volume is attained.
  • Assuming the use of activity-based costing, calculate the unit manufacturing cost of the standard and enhanced products if the expected manufacturing volume is attained.
  • Ontario’s selling price is based heavily on cost:
    • Calculate which product is over cost and which is under cost by using direct-labor hours as an application base.
    • Explain if it is possible that this over costing and under costing is responsible for the profit issues the company is facing.
  • Illustrate how the solution will change if the following data changes:
    • The overhead associated with order processing is $300,000 and the overhead associated with product inspection is $270,000.

Present your work in Microsoft Excel spreadsheet format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M5_A2.xls.

By Thursday, November 21, 2013, deliver your assignment to the M5: Assignment 2 Dropbox.

Assignment 2 Grading Criteria Maximum Points
Assuming the use of direct labor hours to apply overhead to production, calculated the unit manufacturing costs of the standard and enhanced products if the expected manufacturing volume is attained. 16
Assuming the use of activity-based costing, calculated the unit manufacturing cost of the standard and enhanced products if the expected manufacturing volume is attained. 16
Calculated which product is over cost and which is under cost by using direct-labor hours as an application base. 16
Explained if it is possible that this over costing and under costing is responsible for the profit issues the company is facing. 16
Illustrated how the solution will change if the following data changes in the described example. 12
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation. 4
Total: 80

testimonials icon
Describe the collection planning process and evaluate the potential problems that can interfere with effective collection planning and subsequent...
testimonials icon
Order Grade A+ Academic Papers Instantly!...
testimonials icon
I uploaded the scenario. You only have to do a introduction page, What would your plans for intervention include?, What would your steps for in...
testimonials icon
Help with discussion questions provide answer under the question. APA and in references. part 1: After completing this week&...
testimonials icon
Predict what impact the technology will have on future health care delivery.Explore the technology systems offered by Nanthealth, a provider of...
testimonials icon
Write an informal presentation (500-700 words) to educate nurses about how the practice of nursing is expected to grow and change. Include...
testimonials icon
For this assignment, you are to address either “Question A” or “Question B”. Select one or the oth...
testimonials icon
Details:Select a family to complete a family health assessment. (The family cannot be your own.)Before interviewing the family, develop t...
testimonials icon
"Case Study instructions:Each Case Study assignment is designed to help you make application of course content to...
testimonials icon
please check...
testimonials icon
Dr. Smith Kevins...
Calculate Price

When you use PaperHelp, you save one valuable — TIME

You can spend it for more important things than paper writing.

Approx. price
$65
Order a paper. Study better. Sleep tight. Calculate Price!
Created with Sketch.
Calculate Price
Approx. price
$65