Velluna: Two Lighting Lines and Two Cost Drivers — سؤال دراسة حالة في المحاسب الإداري المعتمد

The case

Velluna manufactures designer architectural lamps and utility fixtures. Designer lamps require extensive manual assembly; utility fixtures use longer automated machining runs. Velluna's current normal-costing system applies all factory overhead using total direct labor cost. It is evaluating separate departmental rates.

Original annual budget	Machining	Assembly
Manufacturing overhead	$240,000	$180,000
Direct labor cost	$20,000	$300,000
Machine hours	40,000	0

Actual annual production data	Designer lamps	Utility fixtures
Units produced	1,500	10,000
Direct materials used	$90,000	$150,000
Machining direct labor cost	$10,000	$20,000
Assembly direct labor cost	$180,000	$100,000
Machine hours	5,000	34,000

Actual assembly overhead was $174,000. Under the proposed departmental model, machining overhead uses machine hours and assembly overhead uses assembly direct labor cost.

Next year's unit production plan is 20% above the current year's output for both lines, with another 20% increase planned for the following year. Materials quantities per unit and purchase prices are expected to stay constant. Materials on hand at the beginning of next year will cost $18,000. Desired ending raw materials equal 15% of the following year's production needs, measured at unchanged prices.

Velluna is launching utility fixtures across a broad commercial market. Their intended advantage is a sustainably lower delivered cost through standardized designs, efficient production, and purchasing scale, rather than exclusive styling. Management is also reviewing quality-control costs and the accounting for normal and abnormal production losses.

Assumptions

Use original budgeted rates in both normal-costing models; the plantwide denominator includes direct labor cost in both departments.
For departmental assembly overhead, include only assembly direct labor cost in the actual activity base.
Materials purchasing calculations concern raw materials only; there are no price changes, purchase discounts, or inventory write-downs.
For spoilage classification, unavoidable losses expected under efficient operating conditions are normal and enter the cost of good output; clearly avoidable abnormal losses are expensed in the current period.
Quality-cost categories are prevention, appraisal, internal failure, and external failure; classify a cost by its stated purpose and timing.

Order the calculations needed to determine the normal-cost unit cost of designer lamps under Velluna's current plantwide direct-labor-cost method. Apply the steps to the entire annual designer-lamp production batch before calculating cost per lamp.

Dragging, or the arrow buttons, to reorder.

Add designer-lamp direct materials, designer-lamp direct labor from both departments, and the applied plantwide overhead.
Divide the designer-lamp batch cost by the 1,500 lamps produced.
Divide total budgeted factory overhead by total budgeted factory direct labor cost.
Multiply the plantwide rate by the designer line's actual direct labor cost in both departments.

Saving…

Which TWO benefits could follow from Velluna's proposed departmental overhead rates? Select exactly TWO.

Select two answers. Selected 0 / 2

Answer The model can reflect the utility line's substantial machine usage even though its assembly labor cost is relatively low. Each product will necessarily receive the same overhead charge per unit. The model can reduce distortions caused by applying labor-intensive and machine-intensive overhead through one labor-cost base. All actual departmental overhead will be applied exactly, regardless of activity or spending differences. The model makes allocated departmental fixed overhead per unit a relevant incremental cost when evaluating a one-time order using idle capacity.

Using the proposed departmental method, Velluna's annual assembly overhead is Assembly overhead application status by Assembly overhead balance magnitude .

What dollar amount of direct materials should Velluna plan to purchase next year? Include materials needed for production and the target ending raw materials, and deduct beginning raw materials. Enter a positive whole-dollar amount rounded to the nearest dollar.

Answer USD

A whole number.

During the utility-fixture launch, Velluna spends more on final electrical testing of finished units before shipment and on replacing defective units returned by customers. Which TWO quality-cost categories increased in these specific examples? Select exactly TWO.

Select two answers. Selected 0 / 2

Answer Prevention costs External failure costs Internal failure costs Appraisal costs Financing costs

Classify each production loss under the stated policy: an unavoidable startup sample within the validated efficient-process allowance Unavoidable allowed startup sample ; a batch ruined after an operator bypasses the approved voltage setting Bypassed voltage setting ; a standard unavoidable cutting loss included in the engineering yield allowance Expected efficient cutting loss ; lamps damaged because overdue preventive maintenance was knowingly omitted Omitted required maintenance ; output discarded after an avoidable substitution of an unapproved adhesive Unapproved adhesive substitution .

For the utility line's broad commercial market, Velluna's stated source of sustainable advantage most closely fits Competitive strategy . The production emphasis supporting that strategy is Supporting operating emphasis .

The marks, the correct answers and the explanations appear as soon as the answers are submitted. Unanswered questions earn no marks.

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