Midterm Exam - Wednes... iSaved2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea,and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activitiesfollow:ActivityActivity Cost Pool andActivity Measure(number of orders)(number of requests)EstimatedOverheadCost189,000252,000DeluxePurchase ordersRework requestsRegularTotal1,1001,600Product testing (number of tests)800350,0004005,000Machine related (machine-hours)12,5001,250,00020,00030,00012$2,041,000Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools.Activity Cost PoolActivity RatePurchase ordersper orderRework requestsper requestper testProduct testingMachine relatedper MH3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following:a. Determine the total amount of overhead that would be applied to each model for the year. (Do not round intermediate calculationsand round your final answers to nearest whole dollar amount.)RegularDeluxeTotal overhead cost$2,7001,20017,50050,000 g Enabled: MGMT8500-Midterm Exam - Wednes...SavedSiegel Corporation manufactures a product available in both a deluxe and a regular model. The company has made the regular modelfor years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of thedeluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of itscosting system. Sales of the deluxe model have been increasing rapidly.Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that$2,041,000 in overhead costs would be incurred and the company would produce and sell 5,000 units of the deluxe model and32,000 units of the regular model. The deluxe model requires 2.5 hours of direct labour time per unit, and the regular model requires1.2 hours. Materials and labour costs follow:Deluxe$12520Regular$8512Direct materials cost per unitDirect labour cost per hourlabour hours as the basis for allocating overhead costs to products.and Round your answers to 2

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2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: Activity Estimated Overhead Cost Deluxe Regular Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Total $ 189,000 1,100 1,600 400 800 252,000 350,000 1,250,000 5,000 Product testing (number of tests) Machine related (machine-hours) 12,500 20,000 30,000 $2,041,000 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. 2,700 1,200 17,500 50,000

2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: Activity Estimated Overhead Cost Deluxe Regular Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Total $ 189,000 1,100 1,600 400 800 252,000 350,000 1,250,000 5,000 Product testing (number of tests) Machine related (machine-hours) 12,500 20,000 30,000 $2,041,000 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. 2,700 1,200 17,500 50,000

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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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?
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3 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: 5 ints 00:40:40 Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Activity Cost Pool Purchase orders Rework requests Product testing Machine related Estimated Overhead Cost $ 170,000 374,400 350,000 1,150,000 $2,044,400 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Rate per order per request per test per MH Deluxe 1,000 600 5,000 18,000 Activity Regular 1,500 1,200 12,500 28,000 Total 2,500 1,800 17,500 46,000 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the…
Z Company uses activity based costing and gives you the following data regarding cost pools and estimated overhead cost for each pool. Machine related RO 80,000 Material handling RO 130,000 Purchase related RO 340,000 General factory RO 320,000 The amount of total estimated overhead is: a. RO 660,000 b. RO 550,000 c. RO 790,000 d. RO 870,000 fast just choose
Garrell Corporation is conducting a time-driven activity-based costing study in its Customer Support Department. The company has provided the following data to aid in that study: Time-driven activity rate (cost per unit of activity) Activity cost pool: Receiving Calls Resolving Issues Settling Disputes Cost Object Data: Number of calls received Number of issues resolved Number of disputes settled Customer P 31 17 1 $5.46 $8.58 $13.26 Customer Q 21 10 Required: Using time-driven activity-based costing, determine the total Customer Support Department cost assigned to cach customer.
Oriole Stairs Co. designs and builds factory-made premium wooden stairways for homes. The manufactured stairway components (spindles, risers, hangers, hand rails) permit installation of stairways of varying lengths and widths. All are of white oak wood. Budgeted manufacturing overhead costs for the year 2025 are as follows. Overhead Cost Pools Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines Inspecting Inventory control (raw materials and finished goods) Utilities Total budgeted overhead costs Purchasing Handling materials Production (cutting, milling, finishing) Setting up machines For the last 4 years, Oriole Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2025, 100,000 machine hours are budgeted. Activity Cost Pools Inspecting Inventory control (raw materials and finished goods) Utilities Jeremy Nolan, owner-manager of Oriole Stairs Co., recently directed his accountant, Bill Seagren, to…
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As a new accountant of the company, you are provided with the following information related to KOKO: Product Annual production and sales unit Direct material cost per unit Direct labour cost per unit Machine hours per unit Selling price per unit Koko 5,500 RM50 RM35 3 hours RM150 The company is considering of changing the traditional method to the Activity Based Costing (ABC) method. In order to adopt ABC method the following information is required: Activity Cost Cost Driver Pool Expected overhead Expected use of drivers per product Other products 3,500 costs Коко (RM) No of purchase orders Machine hours Maintenance Maintenance hours Number of inspections Total Purchasing 4,000 37,500 Machining 16,500 8,000 1,500 147,000 43,000 3,500 Quality control 1900 1600 17,500 245,000 Required: a. If the company decided to use the Activity Based Costing (ABC) method, determine the cost per unit of KOKO. Based on your answer in (a), advise whether the company should change to ABC method. Support…