Accounting Assignment: MANAGERIAL ANALYSIS--Ideal Manufacturing
There are two separate exercises in this assignment. You will submit a separate file for each exercise.
Ideal Manufacturing Company has supported a research and development (R&D) department that has for many years been the sole contributor to the company's new farm machinery products. The R&D activity is an overhead cost center that performs services only to in-house manufacturing departments (four different product lines), all of which produce agricultural/farm/ranch-related machinery products.
The department has never sold its services to outside companies. But, because of its long history of success, larger manufacturers of agricultural products have approached Ideal to hire its R&D department for special projects. Because the costs of operating the R&D department have been spiraling uncontrollably, Ideal's management is considering entertaining these outside approaches to absorb the increasing costs. However, (1) management doesnl have any cost basis for charging R&D services to outsiders, and (2) it needs to gain control of its R&D costs. Management decides to implement an activity-based costing system in order to determine the charges for both outsiders and the in-house users of the department's services.
R&D activities fall into four pods with the following annual costs.
Market analysis $1.050,000
Product design 2.350.000
Product development 3.600.000
Prototype testing 1.400.000
Activity analysis determines that the appropriate cost drivers and their usage for the four activities are:
Activities Cost Drivers Total Estimated Drivers
Market analysis Hours of analysis 15.000 hours
Product design Number of designs 2.500 designs
Product development Number of products 90 products
Prototype testing Number of tests 500 tests
Instructions
(a) Compute the activity-based overhead rate for each activity cost pod.
(b) How much cost would be charged to an in-house manufacturing department that consumed 1,800 hours of market analysis time, was provided 280 designs relating to 10 products, and requested 92 engineering tests?
(c) How much cost would serve as the basis for pricing an R&D bid with an outside company on a contract that would consume 800 hours of analysis time, require 178 designs relating to 3 products, and result in 70 engineering tests?
(d) What is the benefit to Ideal Manufacturing of applying activity-based costing to its R&D activity for both in-house and outside charging purposes?
Prepare this assignment in Excel using formulas for the calculations. For part d, write your response in the Excel worksheet as well. There is no grading rubric for this assignment. APA formatting is not required for this assignment.
Include a title page with identifying information and double space the assignment so I can insert comments.
Equivalent Units-2nd Assignment
Purpose of Assignment
The materials covered this week distinguish between the different costing methods and provides needed tools for decision making. This case study focuses on determining equivalent units in a production business setting.
Assignment steps
Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee (SEC)
Scenario: Davis Skaros has recently been promoted to production manager. The company uses process costing. He has just started to receive various managerial reports, including the production cost report you prepared. It showed his department had 2,000 equivalent units in ending inventory.
His department has had a history of not keeping enough inventory on hand to meet demand. He has come to you, very angry, and wants to know why you credited him with only 2,000 units when he saw on his production line at the end of the month 4,000 units.
Prepare a maximum 300-word response and explain to Mr. Skaros why his production cost report showed only 2,000 equivalent units in ending inventory. In accounting terms, explain to him the concept of equivalent units versus the physical units on the production floor.
Reference
Kimmel, P. , Weygandt, J. , Kieso, D. (2017) Accounting : Tools for Business Decision Making, 6th edition.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.