View Policies Current Attempt in Progress Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations. Direct labor costs Machine hours Setup hours (a) Standard $50,000 1,500 Save for Later 90 Predetermined overhead rate eTextbook and Media Custom Total estimated overhead costs are $312,000. Overhead cost allocated to the machining activity cost pool is $210,000, and $102,000 is allocated to the machine setup activity cost pool. $100,000 1,500 Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) 420 % of direct labor cost Attempts: 0 of 5 used Submit Answer

View Policies Current Attempt in Progress Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations. Direct labor costs Machine hours Setup hours (a) Standard $50,000 1,500 Save for Later 90 Predetermined overhead rate eTextbook and Media Custom Total estimated overhead costs are $312,000. Overhead cost allocated to the machining activity cost pool is $210,000, and $102,000 is allocated to the machine setup activity cost pool. $100,000 1,500 Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) 420 % of direct labor cost Attempts: 0 of 5 used Submit Answer

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter4: Job-order Costing And Overhead Application

Section: Chapter Questions

Problem 34BEB: Use the following information for Brief Exercises 4-34 and 4-35: Sanjay Company manufactures a...

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Communication Carol Creedence, the plant manager of the Clearwater Companys Revival plant, has prepared the following graph of the unit costs from the job cost reports for the plants highest volume product, Product CCR. Carol is concerned about the erratic and increasing cost of Product CCR and has asked for your help. Prepare a one-half page memo to Carol, interpreting this graph and requesting any additional information that might be needed to explain this situation.
Problem 2 Milky Corporation has provided the following data from its activity-based costing accounting system: Activity Cost Pools Designing products Setting up batches Assembling products Total Cost P1,372,448 P33,300 P126,160 Total Activity 7,798 product design hours 740 batch set-ups 6,640 assembly hours The activity rate for the "designing products" activity cost pool is answer must be in nearest peso A The activity rate for the "setting up batches" activity cost pool is answer should be in nearest peso A The activity rate for the "assembling products" activity cost pool is answer must be in nearest peso A
Murdocn Ledr XAA is considering different costing options. They are now using a traditional costing procedures which applies overhead on the basis of machine hours. They have two products, A and B. XAA is considering a shift to activity-based costing and has created three cost pools. Data ón the cost pools and respective driver are shown below. Pool 1 Pool 2 Pool 3 Driver: Machine Driver: Driver: Product hour setup parts 2,250 A 1,200- 45 2,800 55 750 Pool Cost 160,000 280,000 360,000 $4 The overhead cost allocated to product A by using activity-based costing procedures would be: O a. $240,000. O b. $356,000. O c. $444,000. o d. $560,000. O e. some other amount. O Type here to search
Current Attempt in Progress Concord, Inc. produces two types of gas grills: a family model and a deluxe model. Concord's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations: Direct labor costs Machine hours Setup hours (a) Total estimated overhead costs are $457,200. Overhead cost allocated to the machining activity cost pool is $274,320 and $182,880 is allocated to the machine setup activity cost pool. (b) Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 15.25.) Overhead rate S Your answer is correct. e Textbook and Media Machining (c) Family Model $76,200 2,000 200 Your Answer Correct Answer (Used) Compute the overhead…
E4-14 Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year. $300,000 Direct materials costs Direct labor costs 150,000 Setup time 500,000 Supervision $ 30,000 100,000 Commercial Operating income (loss) $480,000 Overhead costs Revenues $85,000 85,000 Estimated Overhead 90,000 60,000 $85,000 The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product…
Two years ago, company scientists developed an alloy with all of the properties of the raw materials used in XL-D that generates no wastewater. Some prototype components using the new material were produced and tested and found to be indistinguishable from the old components in every way relating to their fitness for use. The only difference is that the new alloy is more expensive than the old raw material. The company has been test-marketing the newer version of the component, referred to as XL-C, and is currently trying to decide its fate. Manufacturing of both components begins in the Production Department and is completed in the Assembly Department. No other products are produced in the plant. The following information relates to the two components: Units produced Raw material costs per unit Direct labor-hours per unit-Production Direct labor-hours per unit-Assembly Direct labor rate per hour-all labor Machine-hours per unit-Production Machine-hours per unit-Assembly Testing hours…
Shalom Company uses traditional costing method in allocating overhead. When you presented the idea of activity-based costing, the manager became interested and showed you details of its current costing method: Overhead using Products Traditional Allocation Peace Piss Piece 460,000 540,000 920,000 Cost drivers 40,000 30,000 90,000 1,920,000 The manager wants a report that shows comparison of the two costing methods. You began your analysis and applied activity-based costing. What product line/s had an overstated overhead cost?
Computing and using activity-based costing overhead allocation rates Koehler (see Exercise E19-15 and Exercise E19-16) makes handheld calculators in two models—basic and professional—and wants to further refine its costing system by allocating overhead using activity-based costing. The estimated $721,000 of manufacturing overhead has been divided into three primary activities: Materials Handling, Machine Setup, and Insertion of Parts. The following data have been compiled: Requirement 1 Koehler expects to produce 200,000 basic models and 200,000 professional models. Compute the predetermined overhead allocation rates using activity-based costing. How much overhead is allocated to the basic model? To the professional model? Requirement 2 Compare your answers for Exercise E19-15, Exercise E19-16, and Exercise E19-17. What conclusions can you draw? Note: Short Exercise S19-15 and ES19-16 must be completed before attempting Short Exercise 519-17.
Problem Set: Module 3 еBook Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion The management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department factory overhead rate method. The following factory overhead was budgeted for Nova: Fabrication Department factory overhead $697,000 Assembly Department factory overhead 287,000 Total $984,000 Direct labor hours were estimated as follows: Fabrication Department 4,100 hours Assembly Department 4,100 Total 8,200 hours In addition, the direct labor hours (dlh) used to produce a unit of each product in each department were determined from…
Question 1 Bradford Watch Company manufactures luxury and sports watches both for male and female customers. The luxury watches are famous for the high-end design materials while the sports watches are popular for their utilities. The company uses a traditional costing system in assigning overhead costs to the products on the basis of direct labour hours. However, the Production Manager seeks to replace the existing system with the Activity-based Costing (ABC) system to keep control over costs and offer more competitive pricing. After reviewing the existing costing system and interviewing the company’s personnel in relevant departments, the accountant compiled a report highlighting resources and costs involved in manufacturing watches per month: The following table lists out the overhead cost: Activity cost pool Overhead cost (£) Additional Notes Job-order set up 33,000 Procurement and placement 360,000 Installation of winding system 195,000 An…
Question 1: Support Department cost allocation Computer Horizons Ltd. manufactures computers. The company has two corporate support departments (legal and personnel) in supporting each other and two manufacturing departments, the Laptop department and the Workstation department. The overhead costs of support departments are allocated to the manufacturing departments. Legal hours are used to allocate the cost of legal department, and personnel hours are used to allocate the cost of personnel department. The budgeted overhead costs and cost allocation bases are given below: Support Departments Manufacturing Departments Legal Personnel Laptop Workstation Overhead Costs before any inter department cost allocations $9,055 $4,000 $240,000 $200,000 Support Work provided by Legal Department Legal hours 3 37 Support work provided by Personnel Department Personnel hours 40 30 200 160 Required: Report the total costs of the manufacturing departments (Laptop and Workstation) after the support…
implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system Driver and guard wages Vehicle operating expense Vehicle depreciation. Customer representative salaries and i expenses office expenses Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses office expenses Administrative expenses Administrative expenses Total cost The distribution of resource consumption across the activity cost pools is as follows. Pickup and Delivery 35% 5% $1,000,000 510,000 390,000 Driver and guard wages Vehicle…