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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 4
VALUE-STREAM COSTING
During the week of June 12, Leonard Manufacturing produced and shipped 7,500 units of its aluminum wheels: 1,500 units of Model A and 6,000 units of Model B. The following costs were incurred:
Required:
1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy.
2. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation.
3. What if Model A is responsible for 40 percent of the materials cost? Show how the unit cost would be adjusted for this condition.
During the week of June 12, Leonard Manufacturing produced and shipped 7,500 units of its aluminum wheels: 1,500 units of Model A and 6,000 units of Model B. The following costs were incurred:
Required:
1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy.
2. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation.
3. What if Model A is responsible for 40 percent of the materials cost? Show how the unit cost would be adjusted for this condition.
Explanation
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Verified
1. Calculation of the unit cost:
The c...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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