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27/08/2022
I need the solutions for these 2 problems to help in my examination preparation.thanksSample problem 4.Lennox Industries manufactures two products: A and B. A review of the company’s accounting records revealed the following per-unit costs and production volumes:ABProduction volume (units)2,5005,000Direct material$ 40$ 60Direct labor:2 hours at $12243 hours at $1236Manufacturing overhead:2 hours at $931863 hours at $93279Manufacturing overhead is currently computed by spreading overhead of $1,860,000 over 20,000 direct labor hours. Management is considering a shift to activity-based costing in an effort to improve the firm’s accounting procedures, and the following data are available:Cost Driver VolumeCost PoolCostCost DriverABTotalSetups$ 240,000Number of setups10020120General factory1,500,000Direct labor hours5,00015,00020,000Machine processing 120,000Machine hours2,2008003,000$1,860,000Lennox determines selling prices by adding 40% to a product’s total cost.Required:A.Compute the per-unit cost and selling price of product B by using Lennox’s current costing procedures.B.Compute B’s per-unit overhead cost of product B if the company switches to activity-based costing.C.Compute the total per-unit cost and selling price under activity-based costing.D.Lennox has recently encountered significant international competition for product B, with considerable business being lost to very aggressive suppliers. Will activity-based costing allow the company to be more competitive with product B from a price perspective? Briefly explain.E.Will the cost and selling price of product A likely increase or decrease if Lennox changes to activity-based costing? Why? Hint: No calculations are necessary. Sample problem 5.Edwards Company had a beginning work-in-process inventory of 30,000 units on June 1. These units contained $120,000 of direct materials and $272,000 of conversion cost. The following data relate to activity during June:Production completed (units)70,000Ending work in process, 60% complete (units)20,000Direct materials used ($) 258,000Conversion cost ($)695,600Edwards uses a weighted-average process-costing system. All materials are added at the start of manufacturing; in contrast, conversion cost is incurred evenly throughout production.Required:A.Compute the total equivalent units for direct material and conversion cost.B.Compute the cost per equivalent unit of direct material and conversion cost.C.Determine the cost of completed production.D.Determine the cost of the June 30 work in process.
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