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Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 18
Value-Stream Costing Objective
During the week of June 12, Harrison Manufacturing produced and shipped 15,000 units of its aluminum wheels: 3,000 units of Model A and 12,000 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, Harrison Manufacturing produced and shipped 15,000 units of its aluminum wheels: 3,000 units of Model A and 12,000 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 is as fol...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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