The direct labour rate is RM1.50 per hour and the direct materials cost is RM1.20 per kg.The production manager and the cost supervisor have arrived at the following cost driverbasis:Cost driverCost poolsMachiningSet-up costsPackagingInspectionMachine hoursDirect materials (kg)Number of units producedNumber of units producedRequired:a) Using the ABC approach, calculate the production cost per unit.b) Using traditional costing approach, compare the cost per unit for each of the products.C) Why is there a difference between the traditional and ABC approach of calculating thetotal cost per unit? Question 6Alien is the cost supervisor at the production department for a bakery chain store calledLofa Bakery in Alor Setar. This bakery produces three types of products, namelycupcakes, doughnuts and curry puffs. The following information rates to the bakeryoperations for the year ending 31 December 2020.The total production costs are given below:RMCost poolsMachiningSet-up costsPackagingInspection8,0005,5004,2002,800Direct materials750 kg100 kg50 kgOutput (units)MachineDirect labour50050 hours150 hoursCupcakesDoughnutsCurry puffs30060 hours60 hours20080 hours40 hours

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Description: The direct labour rate is RM1.50 per hour and the direct materials cost is RM1.20 per kg.The production manager and the cost supervisor have arrived at the following cost driverbasis:Cost driverCost poolsMachiningSet-up costsPackagingInspectionMachi

Activity based costing is the method of allocation of indirect costs to the cost of product. The…

Business

Accounting

Alien is the cost supervisor at the production department for a bakery chain store called Lofa Bakery in Alor Setar. This bakery produces three types of products, namely cupcakes, doughnuts and curry puffs. The following information rates to the bakery operations for the year ending 31 December 2020. The total production costs are given below: Cost pools Machining Set-up costs Packaging Inspection RM 8,000 5,500 4,200 2,800 Output (units) 500 Machine Direct materials Direct labour 750 kg 100 kg 50 kg 150 hours Cupcakes Doughnuts Curry puffs 50 hours 60 hours 80 hours 60 hours 40 hours 300 200

Alien is the cost supervisor at the production department for a bakery chain store called Lofa Bakery in Alor Setar. This bakery produces three types of products, namely cupcakes, doughnuts and curry puffs. The following information rates to the bakery operations for the year ending 31 December 2020. The total production costs are given below: Cost pools Machining Set-up costs Packaging Inspection RM 8,000 5,500 4,200 2,800 Output (units) 500 Machine Direct materials Direct labour 750 kg 100 kg 50 kg 150 hours Cupcakes Doughnuts Curry puffs 50 hours 60 hours 80 hours 60 hours 40 hours 300 200

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4BE: Activity-based costing: selling and administrative expenses Jungle Junior Company manufactures and...

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Problem 1. Mahinahon Company would like to institute an activity-based costing system to price products. The company's Purchasing Department incurs costs of P550,000 per year and has six employees. Purchasing has determined the three major activities that occur during the year. Activity Allocation Measure # of People Total Cost Issuing purchase orders # of purchase orders 1 P285,000 Reviewing receiving reports # of receiving reports 2 P190,000 Making phone calls # of phone calls 3 P220,000 During the year, 50,000 phone calls were made in the department; 15,000 purchase orders were issued; and 10,000 shipments were received. Product A required 200 phone calls, 150 receiving reports, and 50 purchase orders. Product B required 350 phone calls, 400 receiving reports, and 100 purchase orders. 1Determine the amount of purchasing department cost that should be assigned to each of these products. 1.2. Determine purchasing department cost per…
Alien is the cost supervisor at the production department for a bakery chain store called Lofa Bakery in Alor Setar. This bakery produces three types of products, namely cupcakes, doughnuts and curry puffs. The following information rates to the bakery operations for the year ending 31 December 2021. The total production costs are given below: Cost pools Machining Set-up costs Packaging Inspection RM 8,000 5,500 4,200 2,800 Direct labour Output (units) 500 300 Machine Direct materials Cupcakes Doughnuts Curry puffs 50 hours 750 kg 100 kg 50 kg 150 hours 60 hours 60 hours 200 80 hours 40 hours Cost pools Machining Set-up costs Packaging Inspection Cost driver Machine hours Direct materials (kg) Number of units produced Number of units produced Required: Using the ABC approach, calculate the activity rate for each pools.
Allocating Selling and Administrative Expenses using Activity-Based CostingShrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price$1,110per unitCost of goods sold682 Gross profit$428per unit In addition, the company incurs selling and administrative expenses of $414,030. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related to its three major nonmanufacturing activities: customer service, sales order processing, and advertising support. The advertising support is in the form of advertisements that are placed by Shrute Inc. to support the retailer's sale of Shrute copiers to consumers. The budgeted activity costs and activity bases associated with these activities are: ActivityBudgeted Activity Cost Activity BaseCustomer service$76,860Number of service requestsSales order processing25,920Number of sales…
k ces Marvin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent to the cost of the supplies to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. A consultant has analyzed the delivery service using activity- based costing methods and identified four activities. Data on these activities follow. Data on these Activity Processing order Loading truck Delivering merchandise Processing invoice Total overhead Cost Driver Number of orders. Number of items. Number of orders Number of invoices Order value Number of orders. Number of items Number of invoices Cost Driver Volume 52 600 12 Cost $75,000 150,000 90,000 72,000 $387,000 Driver Volume 5,000 orders 100,000 items Two of Marvin's customers are City Diner and Le Chien Chaud. Data for orders and deliveries to these two customers follow. City Diner Le Chien Chaud $75,000 $99, 900 110 1,500 150 5,000 orders 4,000 invoices Required: a. What would the delivery charge for…
Bumblebee Mobiles manufactures a line of cell phones. The management has identified the following overhead costs and related cost drivers for the coming year. The following were incurred in manufacturing two of their cell phones, Bubble and Burst, during the first quarter. REQUIREMENT Review the worksheet called ABC that follows these requirements. You have been asked to determine the cost of each product using an activity-based cost system. Note that the problem information is already entered into the Data Section of the ABC worksheet.
Angle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Direct labor hours Machine hours Overhead costs Multiple Choice Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 2 direct labor hour and 3.30 machine hours in the Assembly Department, and 4.50 direct labor hours and 0.4 machine hours in the Finishing Department? O$17.60. Assembly 180,000 DLH 380,000 MH $380,000 $20.40. Finishing 148,000 DLH 91, 200 MH $562, 400
A manufacturer uses activity-based costing to assign overhead costs to products. Budgeted cost information for selected activities for next year follows. Activity Purchasing Cleaning factory Providing utilities Activity cost pool Purchasing Factory Expected Cost $127,600 31,500 63,070 Expected Costs Compute activity rates for each of the cost pools. (Round your answers to 2 decimal places.) Expected Amount of Cost Driver Cost Driver Purchase orders Square feet Square feet 4,400 4,900 Activity Overhead Rate Expected Usage of Cost Driver 4,488 purchase orders 4,900 square feet 4,900 square feet per purchase order per square foot
Appendix 4B) Assigning Support Department Costs by Using the Direct Method Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of maintenance hours. The following data pertain to Quillen: Support Departments Producing Departments S1 S2 Cutting Sewing Direct costs $180,000 $150,000 $122,000 $90,500 Normal activity: Number of employees — 30 63 147 Maintenance hours 1,200 — 16,000 4,000 Required: 1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratios—one for Cutting and the other for Sewing.) Enter your answers as decimal values. S1 S2 Cutting Sewing 2. Allocate the support department costs to the producing departments by using the direct method. Use a…
The following is data obtained from cheese cake production activities by PT Cheese Higen for January 2018 During January 2018, the number of cheese cakes produced was 20.000 units Requested: 1. What is the total production cost and production cost of cheese cake per unit? 2. What is the total prime cost and prime cost of cheese cake per unit? 3. What is the total conversion cost and the cheese cake conversion cost per unit?
ROXY Tires the manufacturer and exported company of tires. The company uses an activity based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system. Activity Cost pool Activity Measure Annual Activity Supporting Direct Labor Direct labor Hour $28 per DLH Order Processing Order $285 per Order Custom design processing Custom design $185 per customer design Customer service customer $378 per customer Management would like an analysis of the profitability of a particular customer, Roxy Tires, which has ordered the following products over the last 12 months: Items…………………………….standard model……………….customer Design Number of Tires…………………20………………………………5 Number of orders……………….1……………………………….5 Number of customer designs……0………………………………5 Direct labor hour per Tires 26.5…………………………….28 Selling price per…
Bo-Down Inc. produces yogurt. Information related to the company's yogurt production follows. Support Department 1's costs total $142,000. Using the direct method of support department cost allocation, determine the costs from Support Department 1 that should be allocated to each production department. Production Department 3 Production Production Department 1 Department 2 Support Department 1 cost driver 1,400 100 500 Edit Format Table Paragraph BIUA 12pt v
A Midwest producer of specialty farming equipment, Agriboon, has three products that the company needs costing information about. The following information is available for each product. XY263 GO987 TR345 Direct material cost per unit $2.00 $8.00 $10.00 Direct labor cost per hour $15.00 $16.75 $18.00 Agriboon presently applies overhead using a predetermined rate based on direct labor hours. Estimated Direct Labor hours for the year are 132,026. The product leader for GO987 has suggested that Agriboon switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for the year: Activity Recommended Cost Driver Estimated Cost Estimated Cost Driver Units Materials Handling Requisition Request $38,912 1,216 Request Machine Operations Machine Hours $142,500 12,000 Hours Safety Compliance Compliance Test $125,000 1,100 Test Total OH…