11: Requirements 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. 2. Calculate the cost of unused capacity for the year. 3. Calculate the total cost for each model, and the cost per unit for each model.
11: Requirements 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs. 2. Calculate the cost of unused capacity for the year. 3. Calculate the total cost for each model, and the cost per unit for each model.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:10/8/2021
Chapter 5 - Homework-sehrish bashir
The cost of unused facility rent identified in the preceding step (8)
the minimum rate that Bow should
charge for the use of the space. The facility rent is a (9)
and should (10)
the decision to
sublet the space. (11)
would be beneficial. Before subletting the space, though, Bow's management
should (12).
9: Data Table
Bow Boards
Budgeted Costs for the
Year Ended December 31, 2020
Direct materials-Basic boards
291,500
Direct materials-Competition boards
531,300
Direct manufacturing labor-Basic boards
Direct manufacturing labor-Competition boards
612,000
Machine setup costs
Machine maintenance and utility costs
1,105,000
Indirect labor costs
163,200
Facility rent
167,750
Machine depreciation
30,500
10: Data Table
Other information:
Basic
Competition
Units produced
5,300
Machine hours
26,000
Number of setups
006
Direct labor-hours
36,000
11: Requirements
1.
Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs.
2. Calculate the cost of unused capacity for the year.
3.
Calculate the total cost for each model, and the cost per unit for each model.
Bow has the opportunity to sublease the unused factory space to a startup company that will be manufacturing surf
apparel. None of Bow's machinery will be used. Is there a minimum annual rent that Bow should charge? Are there
other considerations that Bow's management should make prior to offering the space?
4.
any
Transcribed Image Text:- -
10/8/2021
Chapter 5 - Homework-sehrish bashir
4. Bow Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In
fabrication, machine setup costs are driven by the number of setups, machine maintenance and utility costs increase with
the number of machine hours, and indirect labor costs increase with direct labor hours. Facility rent and machine
depreciation are fixed, and are the basis of manufacturing capacity. Fixed costs are allocated equally to each unit produced,
regardless of model. Currently, Bow uses 80% of its manufacturing capacity. The cost of unused capacity is not assigned to
products, but is expensed as a separate line item. For 2020, Bow has budgeted the following:
(Click the icon to view the budgeted information.)
10,
10(Click the icon to view other information.)
11
Read the requirements
Requirement 1. Calculate the cost-allocation rate for each of the activity-cost pools for variable and fixed overhead costs.
Select the formula you will use, then calculate the cost driver rate. (Round the cost driver rates to the nearest cent, $X.XX.
"Machine maint & util" = "Machine maintenance and utility costs".)
%3D
(1)
(2)
Cost driver rate
%3D
Machine setups
(3)
%3D
()
(5)
Machine maint & util
Indirect labor costs
%3D
Facility rent
(9)
Depreciation
(7)
Requirement 2. Calculate the cost of unused capacity for the year.
The cost of unused capacity for the year =
%3D
Requirement 3. Calculate the budgeted total cost and the cost per unit for each model. (Use the rates calculated in
Requirement 1, as needed, for your computations, and round all total cost amounts to the nearest whole dollar. Enter the
cost per unit amounts to the nearest cent, $X.XX.)
Basic
Competition
Direct materials
Direct manufacturing labor
Machine setup costs
Machine maintenance and utilities
Indirect labor
Facility rent
Machine depreciation
Budgeted total cost
Number of units
Budgeted cost per unit
Requirement 4. Bow has the opportunity to sublease the unused factory space to a startup company that will be
manufacturing surf apparel. None of Bow's machinery will be used. Is there a minimum annual rent that Bow should
charge? Are there any other considerations that Bow's management should make prior to offering the space?
Start by determining the cost of the unused factility rent.
The cost of unused facility rent for the year =
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education