southerbell88
Jul 10, 2009, 07:16 PM
Question Details:
Jack Halpern is the owner, and CEO of Aerospace Comfort, a firm specializing in the manufacturing of seats for airplanes. He has just received a copy of a letter written to the General Audit Section on the U.S. Navy. He believes it is from an ex-employee for Aerospace.
Dear Sir,
Aerospace Comfort manufactured 100 X7 seats for the Navy in 2009. The following may be of interest:
1. Direct materials cost billed for the 100 X7 seats were $25,000.
2. Direct manufacturing labor costs bill for 100 X7 seats were $6,000. These costs include 16 hrs. for setup labor at $25 per hr, an amount included in the manufacturing overhead cost pool as well. The $6,000 also includes 12 hrs of design time at $50 an hr. Design time was explicitily identified as a cost the Navy would not reimburse.
3. Manufacturing overhead costs billed for 100 X7 seats were $9,000 (150% of direct manufacturing labor costs) This amount includes the 16 hrs of setup labor at $25 an hr that is incorrectly included as part of direct manufacturing labor costs.
You may also want to know that over 40% for the direct materials is purchased for Frontier Tech, a company that is 51% owned by Jack Halperns brother.
Areospace Comfort's contract state that the Navy reimburses at 130% of total manufacturing costs. Assume athat the facts in the letter are correct as you answer.
1. What is the cost amount per X7 seat that Aerospace Comfort billed the Navy? Assume that the actual direct material costs were $25,000.
2. What is the amount per X7 seat that Aerospace Comfort should have billed the Navy? Assume that the actual direct materials costs were $25,000.
I need to know how you got each answer please, not just the final answer.
Jack Halpern is the owner, and CEO of Aerospace Comfort, a firm specializing in the manufacturing of seats for airplanes. He has just received a copy of a letter written to the General Audit Section on the U.S. Navy. He believes it is from an ex-employee for Aerospace.
Dear Sir,
Aerospace Comfort manufactured 100 X7 seats for the Navy in 2009. The following may be of interest:
1. Direct materials cost billed for the 100 X7 seats were $25,000.
2. Direct manufacturing labor costs bill for 100 X7 seats were $6,000. These costs include 16 hrs. for setup labor at $25 per hr, an amount included in the manufacturing overhead cost pool as well. The $6,000 also includes 12 hrs of design time at $50 an hr. Design time was explicitily identified as a cost the Navy would not reimburse.
3. Manufacturing overhead costs billed for 100 X7 seats were $9,000 (150% of direct manufacturing labor costs) This amount includes the 16 hrs of setup labor at $25 an hr that is incorrectly included as part of direct manufacturing labor costs.
You may also want to know that over 40% for the direct materials is purchased for Frontier Tech, a company that is 51% owned by Jack Halperns brother.
Areospace Comfort's contract state that the Navy reimburses at 130% of total manufacturing costs. Assume athat the facts in the letter are correct as you answer.
1. What is the cost amount per X7 seat that Aerospace Comfort billed the Navy? Assume that the actual direct material costs were $25,000.
2. What is the amount per X7 seat that Aerospace Comfort should have billed the Navy? Assume that the actual direct materials costs were $25,000.
I need to know how you got each answer please, not just the final answer.