Springfield Manufacturing Produces Electronic Storage Devices, and Uses the Following

question 80

Essay

Springfield Manufacturing produces electronic storage devices, and uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labour, and indirect manufacturing costs. Total indirect manufacturing costs for January were $300 million, and were allocated to each product on the basis of direct manufacturing labour costs of each line. Summary data for January for the most popular electronic storage device, the Big Bertha, was:
Required:
a. Compute the total manufacturing cost per unit for each product produced in January.
b. Suppose production will be reduced to 30,000 units in February. If indirect manufacturing costs include fixed costs then explain if the total cost per unit be higher or lower than in January.

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Definitions:

Succession Plan

A plan for how a firm’s leadership transition and related financial matters will be handled.

Ownership Transfer

The legal process of transferring the title of property, assets, or business from one entity or individual to another.

Firm's Leadership

The individuals at the top of an organization who are responsible for setting strategic directions, making major decisions, and inspiring employees towards achieving corporate goals.

Family Businesses

Enterprises owned and often operated by members of the same family, typically passing leadership from one generation to the next.