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) Schfool Residential 39,550 49, 380 41,460 Cinema Foundat ion-laying hours Painting-hours Finishing-hours 38,500 36, 120 60, 600 44,250 47,660 94,000 a. Calculate the activity rates for each of the four activities (Round your answers to 2 decimal places.) Answer is complete and correct. Activity Rate per FLH per CLH 3.44 O per PH Activity Foundation laying 4 30 Building construction 3 48 Painting Finishing 3 25 O per FH

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) Schfool Residential 39,550 49, 380 41,460 Cinema Foundat ion-laying hours Painting-hours Finishing-hours 38,500 36, 120 60, 600 44,250 47,660 94,000 a. Calculate the activity rates for each of the four activities (Round your answers to 2 decimal places.) Answer is complete and correct. Activity Rate per FLH per CLH 3.44 O per PH Activity Foundation laying 4 30 Building construction 3 48 Painting Finishing 3 25 O per FH

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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Fisher Fixtures manufactures three types of lighting fixtures, with model names of Silver, Gold, and Platinum. It applies all indirect costs according to an annual predetermined rate based on direct labor-hours. The plant controller has recommended that the company switch to an activity-based costing system. The controller's staff prepared the following cost estimates for next year (year 2) for the recommended cost drivers. Activity Recommended Cost Driver Estimated Cost Estimated Cost Driver Activity Purchasing material Number of purchase orders $ 130,800 240 purchase orders Receiving material Direct materials cost 238,400 $ 2,980,000 Setting up equipment Number of production runs 231,840 120 runs Machine depreciation and maintenance Machine-hours 80,260 16,052 hours Ensuring regulatory compliance Number of inspections 459,000 54 inspections Shipping Number of units shipped 1,087,200 604,000 units Total estimated cost $ 2,227,500 In addition, management…
Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $458,780 Number of setups 580 Ordering costs 354,900 Number of orders 16,900 Machine costs 710,600 Machine hours 41,800 Receiving 417,100 Receiving hours 9,700 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $578,000 $772,000 Direct labor $470,000 $459,000 Units completed 15,500 8,500 Direct labor hours 5,300 2,100 Number of setups 370 210 Number of orders 5,000 11,900 Machine hours 24,000 17,800 Receiving hours 2,800 6,900 The company's normal activity is 7,400 direct labor hours. Required: 1. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent. Unit Cost Model A $fill in…
Franklin Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Costs Direct labor Direct materials Fringe Benefits: Home 1 2 3 Total Indirect Materials: Assume Franklin needs to allocate two major overhead costs ($67,200 of employee fringe benefits and $18,080 of Indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. Note: Round "Allocation rate" to 2 decimal places. Home 1 2 3 Total Expected Costs Direct labor Direct materials Fringe benefits Indirect materials Total cost Home 1 $ 61,000 107,000 The cost components to determine the total cost of each house: Home 1 Home 2 Allocation Rate x Weight of Base = Allocated Cost X $ 0 0 0 $ Home 2 $ 101,000 148,000 X X Allocation Rate x Weight of Base 0 X $ 0 = = = Home 3 $ 174,000 197,000 = = $ = Allocated Cost $ 0 0 $ $ 0…
Angler Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Assembly 248,888 DLH Finishing 154,000 DLH 68,000 MH 448,800 MH $440,000 Direct labor hours Machine hours Overhead costs Assume that Angler Industries allocates overhead using a plantvide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 3.90 machine hours in the Assembly Department, and 4.00 direct labor hours and 0.6 machine hours in the Finishing Department? Multiple Chaises O O O $21.50 $17.60 $2.00. $18.10 $ 677,680 $13.20.
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Rundle Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Direct labor Home 1: $63,000 Home 2: $108,000, Home 3: $181,000 Direct materials Home 1: 98,000 Home 2: 143,000 Home 3: 186,000 Assume Rundle needs to allocate two major overhead costs ($ 52,800 of employee fringe benefits and $12,,810 of indirect materials cost) among the three Jobs. required; Choose an appropriate cost driver for each of the overhead costs and determine the cost of each house ( round " allocation rate to 2 decimal places.)
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Heidelberg Fabrication manufactures two products, G-09 and G-35: Units produced Direct materials cost per unit Machine-hours per unit Production runs per quarter G-09 19,400 $7 4 144 Machine depreciation Setup labor Materials handling Total Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow: G-35 3,880 $ 19 7 72 $184,760 52,380 41,904 $ 199,044 Required: a. Heidelberg currently applies overhead on the basis of machine-hours. What is the predetermined overhead rate for the quarter? Note: Round your answer to 2 decimal places. b. Heidelberg is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine-hours for machine depreciation, production runs for setup labor, and direct material dollars for materials handling. Compute the cost driver rates for the proposed system at Heidelberg.
Jane’s Cookhouse is a popular restaurant located in a scenic setting. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an ABC study. The intern, in consultation with the owner, identified three major activities. The intern then completed the first-stage allocations of costs to the activity cost pools, using data from last month’s operations. The results appear below: Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners Number of parties served $ 16,585 5,350 parties Serving a diner Number of diners served $ 107,010 13,050 diners Serving a drink Number of drinks ordered $ 35,310 10,700 drinks The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries. A group of diners who ask to sit at the same table are counted as a party. Some costs, such as the…
Genious Corporation implemented activity-based costing several years ago and uses it for its external financial reports. The company has four activity cost pools, which are listed below. Activity Cost Pool Activity Measure Estimated Overhead Cost Machine related Machine Hours $90,000 Purchase orders Number of orders $126,000 Machine setups Number of Setups $200,000 General factory Number of labor hrs $60,000 Expected Activity 5,000 Mhs 2,800 orders 10,000 setups 4,000 Dlhs Manufacturing overhead cost was applied to production. Actual activity during the year was as follows: Activity Cost Pool Machine related Purchase orders Machine setups General factory Actual Activity 10,500 Mhs 800 orders 1,500 setups 8,000 Dlhs It is expected that the company will produce 62,500 units. Compute the activity rate for each activity. Compute the per unit cost for overhead