2nd EditionDavid Anderson, Margaret Ray1,042 explanations

8th EditionN. Gregory Mankiw814 explanations

2nd EditionDavid Anderson, Margaret Ray608 explanations

6th EditionN. Gregory Mankiw423 explanations

ACCOUNTINGMetrics to minimize inventory buildups. Mountain Press produces textbooks for high school accounting courses. The company recently hired a new editor, Jan Green, to handle production and sales of books for an introductory accounting course. Jan’s compensation depends on the gross margin associated with sales of this book. Jan needs to decide how many copies of the books to produce. The following information is available for the fall semester of 2017:
$$
\begin{matrix}
\text{Estimated sales} & \text{50,000 books}\\
\text{Beginning inventory} & \text{0 books}\\
\text{Average selling price} & \text{\$160 per book}\\
\text{Variable production costs} & \text{\$100 per book}\\
\text{Fixed production costs} & \text{\$750,000 per semester}\\
\text{The fixed-cost allocation rate is based on expected sales and is therefore equal to \$750,000/50,000 books=\$15 per book.}\\
\end{matrix}
$$
Jan has decides to produce either 50,000, 65,000, or 70,000 books. 1. Calculate expected gross margin if Jan produces 50,000, 65,000, 70,000 books. (Make sure you include the production-volume variance as part of cost of goods sold.) 2. Calculate ending inventory in units and in dollars for each production level. 3. Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. The chapter suggested metrics will accomplish this objective? Show your work. a. Incorporate a charge of 10% of the cost of the ending inventory as an expense for evaluating the manager. b. Include nonfinancial measures when evaluating management and rewarding performance. ACCOUNTINGElena Martinez employs two workers in her wedding cake bakery. The first worker, Gabrielle, has been making wedding cakes for 20 years and is paid $25 per hour. The second worker, Joseph, is less experienced and is paid$15 per hour. One wedding cake requires, on average, 6 hours of labor. The budgeted direct manufacturing labor quantities for one cake are as follows:
$$
\begin{matrix}
\text{ } & \text{Quantity}\\
\text{Gabrielle} & \text{3 hours}\\
\text{Joseph} & \text{3 hours}\\
\text{Total} & \text{6 hours}\\
\end{matrix}
$$
That is, each cake is budgeted to require 6 hours of direct manufacturing labor, composed of 50% of Gabrielle's labor and 50% of Joseph's, although sometimes Gabrielle works more hours on a particular cake and Joseph less, or vice, versa, with no obvious change in the quality of the cake. During the month of May, the bakery produces 50 cakes. Actual direct manufacturing labor costs are as follows:
$$
\begin{matrix}
\text{Gabrielle (140 hours)} & \text{\$ 3.500}\\
\text{Joseph (165 hours)} & \text{2.475}\\
\text{Total actual direct labor cost} & \text{\$ 5.975}\\
\end{matrix}
$$
1. What is the budgeted cost of direct manufacturing labor for 50 cakes? 2. Calculate the total direct manufacturing labor price and efficiency variances. 3. For the 50 cakes, what is the total actual amount of direct manufacturing labor used? What is the actual direct manufacturing labor input mix percentage? What is the budgeted amount of Gabrielle's and Joseph's labor that should have been used for the 50 cakes? 4. Calculate the total direct manufacturing labor mix and yield variances. How do these numbers relate to the total direct manufacturing labor efficiency variance? What do these variances tell you?