**Educational Content: Activity-Based Costing Analysis**### OverviewIn this exercise, we explore the application of activity-based costing to determine the costs associated with different job types. The focus will be on calculating the total cost and the average cost per thousand square feet for each job using the activity rates computed.### Steps:1. **First-Stage Allocation**: - Allocate costs to the activity cost pools accurately.2. **Compute Activity Rates**: - Use these rates to assess the cost of activities related to job execution.3. **Determine Costs for Jobs**: - Calculate costs for the following asbestos removal jobs: - **A routine 1,000-square-foot asbestos removal job.** - **A routine 2,000-square-foot asbestos removal job.** - **A nonroutine 2,000-square-foot asbestos removal job.**### Detailed Calculation Requirement**Requirements 3A to 3C**:- Employ the activity rates you’ve determined to calculate: - The total cost - The average cost per thousand square feet for each job type.- Ensure that the average cost per thousand square feet is rounded to two decimal places.### Data Presentation#### Table:| Job Type | Total Cost | Average Cost per Thousand Square Feet ||-----------------------------------|------------|---------------------------------------|| Routine, 1,000 sq. ft. job | - | - || Routine, 2,000 sq. ft. job | - | - || Nonroutine, 2,000 sq. ft. job | - | - |**Note**: Insert computed values where dashes are indicated.This table aids in visualizing the cost analysis efficiently, providing essential economic insights into the costs associated with varying sizes and types of asbestos removal jobs.**Activity-Based Costing: A Key Tool**- **Purpose**: Helps businesses make informed financial decisions by comprehensively allocating costs to specific activities.**Practical Application**:- Essential for businesses handling diverse or complex projects, ensuring cost efficiency and precision.--- ### Activity-Based Costing in Asbestos Removal#### IntroductionMetro Asbestos Removal Company specializes in the removal of asbestos from buildings, a process which involves various complexities such as estimating and bidding. The company faces challenges in pricing due to the inability to distinguish between routine and nonroutine work until an inspection is conducted. #### Costing OverviewTo address this issue, an activity-based costing (ABC) study was initiated to analyze all company costs. This system helps accurately determine costs associated with different types of jobs, aiding in more precise pricing strategies.#### Cost Distribution and ActivitiesThe company's costs for the year are divided into several categories:- **Wages and Salaries**: $300,000- **Depreciation**: $90,000- **Supplies**: $40,000- **Equipment Depreciation**: $80,000- **Licensing and Insurance**: $210,000- **Total Cost**: $720,000The resources are consumed across different activities, which are measured as follows:1. **Estimating Costs**: - **Activity Measure**: Thousands of square feet - **Total Activity**: 850 thousand square feet2. **Routine Jobs**: - **Activity Measure**: Number of jobs - **Total Activity**: 300 routine jobs3. **Nonroutine Jobs**: - **Activity Measure**: Number of jobs - **Total Activity**: 100 nonroutine jobsThe study focuses on the cost distribution across these activities, acknowledging both routine and nonroutine jobs, which have distinct resource requirements.#### Resource Consumption DistributionA detailed table displays the percentage distribution of each cost category across the different activities:- **Estimating**: - Wages: 10% - Depreciation: 20% - Supplies: 5% - Equipment Depreciation: 10% - Licensing: 20%- **Working on Routine Jobs**: - Wages: 50% - Depreciation: 60% - Supplies: 25% - Equipment Depreciation: 10% - Licensing: 50%- **Working on Nonroutine Jobs**: - Wages: 25% - Depreciation: 15% - Supplies: 30% - Equipment Depreciation: 25% -

Name: **Educational Content: Activity-Based Costing Analysis**### OverviewI
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Description: **Educational Content: Activity-Based Costing Analysis**### OverviewIn this exercise, we explore the application of activity-based costing to determine the costs associated with different job types. The focus will be on calculating the total cost an

Manufacturing overhead: It is the indirect cost incurred as a part of manufacturing the products.…

Business

Accounting

1. Perform the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each following jobs according to the activity-based costing system. a. A routine 1,000-square-foot asbestos removal job. b. A routine 2,000-square-foot asbestos removal Job. C. A nonroutine 2,000-square-foot asbestos removal job. Complete this question by entering your answers In the tabs below. Req 1 Req 2 Req 3A to 3C Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system. (Round the "Average Cost per thousand square feet" to 2 decimal places.) a. A routine 1,000-square-foot asbestos removal job. b. A routine 2,000-square-foot asbestos removal job. C. A nonroutine 2,000-square-foot asbestos removal job. Show less A Routine 1,000 sq. ft. job Routine 2,000 sq. ft. job Nonroutine 2,000 sq. ft. job Total cost of the job Average Cost per thousand square feet < Req 2 < Prev 3 of 5 Next >

1. Perform the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each following jobs according to the activity-based costing system. a. A routine 1,000-square-foot asbestos removal job. b. A routine 2,000-square-foot asbestos removal Job. C. A nonroutine 2,000-square-foot asbestos removal job. Complete this question by entering your answers In the tabs below. Req 1 Req 2 Req 3A to 3C Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system. (Round the "Average Cost per thousand square feet" to 2 decimal places.) a. A routine 1,000-square-foot asbestos removal job. b. A routine 2,000-square-foot asbestos removal job. C. A nonroutine 2,000-square-foot asbestos removal job. Show less A Routine 1,000 sq. ft. job Routine 2,000 sq. ft. job Nonroutine 2,000 sq. ft. job Total cost of the job Average Cost per thousand square feet < Req 2 < Prev 3 of 5 Next >

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Carlise has identified the following information about its overhead activity pools and the two product lines: Activity Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours Cost Assigned to Pool Indoor Model $ 20,910 $ 85,120 $ 34,790 Materials Handling Quality Control Machine Maintenance Total Overhead Assigned Quantity or Amount Consumed by Quantity or Amount Consumed by Indoor Line Outdoor Line Required: 1. Suppose Carlise used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. Complete this question by entering your answers in the tabs below. 2. Calculate the activity proportions for each activity pool in Carlise's ABC system. 3. Calculate the amount of overhead that Carlise will assign to the Indoor line if it uses an ABC system. 4. Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC…
Rex Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity. Round your answers to two decimal places. Overhead Overhead Annual Rate per Activity per Activity Usage Activity Machine Setups $157,850 4,100 $ Machine Hours 324,622 14,114 2$ Inspections 119,000 3,400
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Care Company uses job costing and has assembled the following cost data for the production and assembly of item X: (Click the icon to view the cost data.) Based on the above cost data, the manufacturing overhead for item X is A. $1,590 underallocated. B. $350 overallocated. C. $350 underallocated. D. $1,590 overallocated. Cost Data Direct manufacturing labor wages Direct material used Indirect manufacturing labor Utilities Fire insurance Manufacturing overhead applied Indirect materials Depreciation on equipment $ 36,000 100,000 3,800 450 490 10,000 6,500 350 X
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The following figure depicts the complete system that Office Inc. uses to estimate the total cost of each office desk and office chair that it produces. How many cost pools does Office Inc.'s 2-stage costing system use for Office Chair objects? A. 7 B. 0 C. 6 D. 5 E. 4 F. 2 G. 1 H. 3 I. 8
1. Calculate the overhead rate based on the traditional overhead allocation method using direct labour hours as the base. 2. Calculate the total overhead applied to order no. 147 using the traditional overhead rate calculated in question 3.1 above. 3. Using activity based costing (ABC), calculate the overhead rate for the following activity: Purchasing. That is, what is the overhead rate per purchase order?
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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: $765,000 315,000 $1,080,000 Fabrication Department factory overhead Assembly Department factory overhead Total Direct labor hours were estimated as follows: Fabrication Department Assembly Department Total In addition, the direct labor hours (dlh) used to produce a unit of each product in each department were determined from engineering records, as follows: Production Departments…
2. Tyler Case, the company's CEO, recently returned from a seminar on activity-based costing and instructed Kalagnanam to consider Implementing the new system. As a first step, he instructed her to analyze the overhead costs for 2021. Through her research she was able to derive the following breakdown of the estimated overhead costs for 2021 Activity Volume Activity Foundation laying Building construction Paint ing Finishing Amount $ 1,830,500 1,740, 000 1,892,000 2,437,500 Activity Measure Foundation-laying hours Construction labour-hours Painting-hours Finishing-hours 425,700 500,000 550,000 750, 000 She also documented the following activity on the three jobs during the first quarter of 2021 (in addition to the construction labour- hours consumed by the three jobs) Foundat ion-laying hours Painting-hours Finishing-hours Schfool Residential 39, 550 49, 380 41,460 38,500 36, 120 60,600 Cinena 44,250 47,660 94,000 a. Calculate the activity rates for each of the four activities (Round…
Howard Corporation manufactures two products: Product B820 and Product P99Y. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products B820 and P99Y. Activity Cost Pool Activity Measure Machining Machine setups Product design Order size Activity Measure Machine-hours Number of setups Number of products Direct labor-hours O $704,200 $301,800 Machine-hours Number of setups Number of products Direct labor-hours O $610,000 O $503,000 Total Cost $ 330,000 $ 300,000 S 46,000 2 products $ 330,000 10,000 DLHs Total Activity 15,000 MHs 500 setups Product B820 7,000 200 1 3,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product B820? Product P99Y 8,000 300 1 7,000
Please refer to the picture. The following information is available for ADT Company, which produces special-order security products and uses a job order costing system. Overhead is applied using a predetermined overhead rate of 55% of direct labor cost.