2. Traditional Costing vs. ABC CPA Company incurs P 800,000 in manufacturing overhead costs. The company has been allocating overhead to individual product lines based on direct labor hours. Cost Driver Direct labor hours Number of batches Amount in Cost Pool P 300,000 300,000 200,000 Number of shipments Total overhead costs P 800,000 Two products have the following characteristics: Direct labor hours Number of batches Number of shipments Product X 2,000 24 2 Amount of Activity 40,000 1,000 500 Product Y 1,000 30 150 REQUIRED: Determine the overhead costs to be allocated to each product (X and Y) using: A) Traditional costing (based on direct labor hours) B) Activity-based costing (ABC)

2. Traditional Costing vs. ABC CPA Company incurs P 800,000 in manufacturing overhead costs. The company has been allocating overhead to individual product lines based on direct labor hours. Cost Driver Direct labor hours Number of batches Amount in Cost Pool P 300,000 300,000 200,000 Number of shipments Total overhead costs P 800,000 Two products have the following characteristics: Direct labor hours Number of batches Number of shipments Product X 2,000 24 2 Amount of Activity 40,000 1,000 500 Product Y 1,000 30 150 REQUIRED: Determine the overhead costs to be allocated to each product (X and Y) using: A) Traditional costing (based on direct labor hours) B) Activity-based costing (ABC)

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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Fluegge Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Direct materials 5.7 liters $ 5.40 per liter Direct labor 0.70 hours $ 20.60 per hour Variable manufacturing overhead 0.70 hours $ 5.50 per hour The company has reported the following actual results for the product for December: Actual output 4,100 units Raw materials purchased 25,100 liters Actual price of raw materials $ 4.80 per liter Actual cost of raw materials purchased $ 120,480 Raw materials used in production 23,360 liters Actual direct labor-hours 2,700 hours Actual direct labor rate $ 21.20 per hour Actual direct labor cost $ 57,240 Actual variable overhead rate $ 5.90 per hour Actual variable overhead cost $ 15,930 The raw materials price variance…
Angel Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: Activity Cost Pools (and Activity Measures) Machine related (machine-hours) Estimated Overhead Cost $323,840 $363,000 $258,420 Batch setup (setups) Order size (direct labor-hours) Expected Activity Activity Cost Pools Machine related Product X Product Y Total 5,400 10,800 4,400 7,400 2,400 7,400 12,800 Batch setup 13,200 11,800 Order size Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to: (Round your intermediate calculations to 2 decimal places.)
Kropf Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Standard Quantity or Hours per Unit of Output Inputs Standard Price or Rate Direct materials $ 7.30 per liter $24.70 per hour $ 6.20 per hour 7.70 liters Direct labor 0.50 hours Variable manufacturing overhead 0.50 hours The company has reported the following actual results for the product for September: Actual output Raw materials purchased Actual cost of raw materials purchased Raw materials used in production 9,900 units 76,500 liters $585,500 76,240 liters 4,650 hours $120,302 $ 23,614 Actual direct labor-hours Actual direct labor cost Actual variable overhead cost Required: a. Compute the materials price variance for September. b. Compute the materials quantity variance for September. c. Compute the labor rate variance for September. d. Compute the labor efficiency variance for September.…
Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead. Unit product cost Additional data concerning these products are listed below. Multiple Choice Product C Product B Product D Product A Products A B C D $17.20 $ 21.10 $ 14.10 $ 16.80 19.20 22.60 17.00 11.00 6.00 7.20 29.10 16.00 $71.50 A 2.25 $ 86.70 $ 2.95 4,600 9.70 16.10 $66.90 $ 56.90 Products Grinding minutes per unit Selling price per unit Variable selling cost per unit Monthly demand in units. The grinding machines are potentially the constraint in the production facility. A total of 10,500 minutes are available per month on these machines. Direct labor is a variable cost in this company. Which product makes the MOST profitable use of the grinding machines? Note: Round your intermediate calculations to 2 decimal places. B 1.30 $ 79.10 $ 3.65 3,600 C 0.85 $ 75.90 $4.40 3,600
Doles Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Activity Cost Pools Setting up batches Processing customer orders Assembling products Data concerning two products appear below: Number of batches Number of customer orders Number of assembly hours Total overhead cost Activity Rate $69.22 per batch $26.28 per customer order $ 12.11 per assembly hour Product K52W 65 45 418 Required: How much overhead cost would be assigned to each of the two products using the company's activity-based costing system? (Round your intermediate calculations and final answers to 2 decimal places.) Product K52W Product X94T Product X94T 52 30 161
Coronado Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an activity-based costing system. The traditional and the activity-based costing systems assign the same amount of direct materials and direct labor costs. Products Product 540X Product 137Y Product 249S (a) Sales Revenue $210,000 Product 137Y * Your answer is incorrect. Product 540X $ LA LA 166,000 LA 94,000 Product 249S $ Total Costs Traditional $59,000 For each product line, compute operating income using the traditional costing system. 49,000 17,000 160060 131040 ABC 53900 $49,940 34,960 40,100
Dirickson Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Standard Quantity or Inputs Hours per Unit of Output Standard Price or Rate Direct materials 7.6 ounces $ 9.40 per ounce $ 18.00 per hour $ 5.30 per hour Direct labor 0.10 hours Variable manufacturing overhead 0.10 hours The company has reported the following actual results for the product for July: Actual output 7,600 units Raw materials purchased 63,000 ounces Actual cost of raw materials purchased Raw materials used in production $ 541,800 57,750 ounces Actual direct labor-hours 820 hours Actual direct labor cost $ 16,072 $ 4,592 Actual variable overhead cost The raw materials price variance for the month is closest to:
Jones Company has the following information: Total estimated manufacturing $200,000 overhead costs Total estimated direct labor costs 800,000 Actual direct labor costs 50,000 Actual manufacturing overhead 210,000 costs What is the predetermined overhead allocation rate based on direct labor costs as a single plantwide rate?
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pool Setting up batches Processing customer orders Assembling products Activity Rate $ 59.41 per batch $ 72.87 per customer order $ 4.10 per assembly hour Data concerning two products appear below: Product Product K91B F650 Number of batches 86 57 Number of customer orders 36 50 Number of assembly hours 490 897 How much overhead cost would be assigned to Product K91B using the activity-based costing system? (Round your intermediate calculations and final answers to 2 decimal places.)
Sheddon Industries produces two products. The products' Identified costs are as follows: Direct materials Direct labor Multiple Choice The company's overhead costs of $54,000 are allocated based on labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What amount of production costs would be assigned to Product A? Note: Do not round Intermediate calculations. $39,000 $50,000 $93,000 Product A $ 20,000 12,000 None of the answers are correct. Product B $ 15,000 24,000
Senff Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pools Setting up batches Processing customer orders Assembling products Data concerning two products appear below: Number of batches Number of customer orders Number of assembly hours Activity Rate $ 82.25 per batch $ 73.65 per customer order $ 9.01 per assembly hour Product V91Z 76 21 493 Product V211 13 10 698 How much overhead cost would be assigned to Product V91Z using the activity-based costing system? (Round your intermediate calculations to 2 decimal places.)
A company has the following overhead costs and activities: Estimated Expected Activity Product V Product W Product X Overhead Activities and Activity Measures Machine setups (setups) Processing customer orders (orders) Assembling products (assembly-hours) $9,178.00 Cost S7,234.50 $3,565.50 69 12 10 20 21 492 697 111 4. A company sells two products, one with sales of $10,000 and variable expenses of $2,500, another with sales of $46,000 and variable expenses of $15,420. Fixed expenses are $33,100. Breakeven point for the whole company is close to: А. 833,100 В. $22,900 C. $51,020 D. $48,676 A company that reduces the proportion of variable costs in its cost structure will: A. enjoys higher stability in profits. B. increase its profits more when the economy is good. C. have a loss more easily when the economy is bad. D. be indifferent. 5. 6. is normally recorded on any financial statement but irrelevant in decision making which is not. A. Sunk cost B. Incremental cost C. Differential…