Questions:1. What is the total cost assigned to Capping Department?2. What is the total cost assigned to Machining Department? Alfred, owner of Hi-Tech Fiberglass Fabricators Inc. is interested in using the reciprocalallocation method. The following data from operations were collected for analysis:Budgeted manufacturing overhead costs:Plant MaintenanceData ProcessingMachiningCappingPM (Support Dept)DP (Support Dept)M (Operating Dept)C (Operating Dept)$350,000$ 75,000$225,000$125,000Services furnished:By Plant Maintenance (budgeted labor-hours):to Data Processing3,500to Machining5,000to Capping8,200By Data Proc ing (budgeted computer time):to Plant Maintenance600to Machining3,500to Capping600

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Description: Questions:1. What is the total cost assigned to Capping Department?2. What is the total cost assigned to Machining Department? Alfred, owner of Hi-Tech Fiberglass Fabricators Inc. is interested in using the reciprocalallocation method. The following

when there is distribution of overhead by the support department to the production department by…

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Questions: 1. What is the total cost assigned to Capping Department? 2. What is the total cost assigned to Machining Department?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 8E: A manufacturing company has two service and two production departments. Building Maintenance and...

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Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is: Previously, Sanjay Bhatt, Firenza Companys controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 50,000. Sanjay has been reading about activity-based costing, and he wonders whether or not it might offer some advantages to his company. He decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setups for setup cost, engineering hours for engineering cost, and machine hours for other. Budgeted amounts for these drivers are 5,000 purchase orders, 500 setups, and 2,500 engineering hours. Sanjay has been asked to prepare bids for two jobs with the following information: The typical bid price includes a 40 percent markup over full manufacturing cost. Required: 1. Calculate a plantwide rate for Firenza Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate activity rates for the four overhead activities. What is the bid price of each job using these rates? 3. Which bids are more accurate? Why?
A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
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A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
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The management of Wheeler Company has decided to develop cost formulas for its major overhead activities. Wheeler uses a highly automated manufacturing process, and power costs are a significant manufacturing cost. Cost analysts have decided that power costs are mixed; thus, they must be broken into their fixed and variable elements so that the cost behavior of the power usage activity can be properly described. Machine hours have been selected as the activity driver for power costs. The following data for the past eight quarters have been collected: Required: 1. Prepare a scattergraph by plotting power costs against machine hours. Does the scatter-graph show a linear relationship between machine hours and power cost? 2. Using the high and low points, compute a power cost formula. 3. Use the method of least squares to compute a power cost formula. Evaluate the coefficient of determination. 4. Rerun the regression and drop the point (20,000; 26,000) as an outlier. Compare the results from this regression to those for the regression in Requirement 3. Which is better?
Young Company is beginning operations and is considering three alternatives to allocate manufacturing overhead to individual units produced. Young can use a plantwide rate, departmental rates, or activity-based costing. Young will produce many types of products in its single plant, and not all products will be processed through all departments. In which one of the following independent situations would reported net income for the first year be the same regardless of which overhead allocation method had been selected? a. All production costs approach those costs that were budgeted. b. The sales mix does not vary from the mix that was budgeted. c. All manufacturing overhead is a fixed cost. d. All ending inventory balances are zero.
The controller for Muir Companys Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible budgeting. She decided to concentrate on the past 12 months since that time period was one in which there was little important change in technology, product lines, and so on. Data on overhead costs, number of machine hours, number of setups, and number of purchase orders are in the following table. Required: 1. Calculate an overhead rate based on machine hours using the total overhead cost and total machine hours. (Round the overhead rate to the nearest cent and predicted overhead to the nearest dollar.) Use this rate to predict overhead for each of the 12 months. 2. Run a regression equation using only machine hours as the independent variable. Prepare a flexible budget for overhead for the 12 months using the results of this regression equation. (Round the intercept and x-coefficient to the nearest cent and predicted overhead to the nearest dollar.) Is this flexible budget better than the budget in Requirement 1? Why or why not?
INWON PETERNULFINN Alfred owner of Hi-Tech Fiberglass Fabricators, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: ← Budgeted manufacturing overhead costs: Plant Maintenance Data Processing Machining Capping PM (Support Dept) DP (Support Dept) M (Operating Dept) C (Operating Dept) Services furnished. By Plant Maintenance (budgeted labor-hours); to Data Processing to Machining to Capping By Data Processing (budgeted computer time): to Plant Maintenance to Machining to Capping What is the complete reciprocated cost of the Data Processing Department? (Do not round any intermediary calculations.) OA. $117,316 OB. $60,415 OC. $260,000 OD. $86.227 GIED $310.000 $50,000 $245.000 $130,000 3,500 5,300 8.000 600 4,100 650
Management Accounting Company B is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: Budgeted manufacturing overhead costs: Plant Maintenance PM (Support Dept) $350,000 Data Processing DP (Support Dept) $75,000 Machining M (Operating Dept) $225,000 Capping C (Operating Dept) $125,000 Services furnished: By Plant Maintenance (budgeted labour-hours): to Data Processing 3,500 to Machining 5,000 to Capping 8,200 By Data Processing (budgeted computer time): to Plant Maintenance 600 to Machining 3,500 to Capping 600 Required : a. What is the complete reciprocated cost of the Plant Maintenance Department? b. What is the complete reciprocated cost of the Data Processing Department? c. "The direct allocation method incorporates mutual services provided among all support departments."…
Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Procurement Scheduling Materials handling Product development Production Disk drives Tape drives Wire drives Activity Cost $378,400 221,900 402,900 770,700 Number of engineering changes 1,402,800 Machine hours Number of Purchase Orders Activity Base Number of purchase orders Number of production orders Number of moves 4,160 2,100 11,100 Production Orders Number of Number of Moves 250 175 1,200 540 860 4,300 The activity rate for the materials handling cost pool is Oa. $63.76 per move Ob. $21.8 per move Oc. $172.68 per move Od. $66.71 per move Number of Engineering Machine Changes Hours 15 2,500 5 9,200 10,300 27 Number of Units 1,600 4,300 2,000
Alfred, owner of Hi-Tech Fiberglass Fabricators, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: Budgeted manufacturing overhead costs: Plant Maintenance Data Processing Machining Capping PM (Support Dept) DP (Support Dept) M (Operating Dept) C (Operating Dept) Services furnished: By Plant Maintenance (budgeted labor - hours): to Data Processing to Machining to Capping By Data Processing (budgeted computer time): to Plant Maintenance to Machining to Capping What is the complete reciprocated cost of the Plant Maintenance OA. $420,000 B. $344,026 OC. $349,666 OD. $353,590 $320,000 $100,000 $245,000 $145,000 3,400 5,800 8,000 800 4,050 750 (Do not round any intermediary calculations.)