3-34 Activity Levels and Cost Drivers Tartan Manufacturing Company produces four lines of h lighting fixtures in a single manufacturing plant. Products are built to specific customer tions. All products are made-to-order. Management of the plant lists the following as the ke at the plant: a. Product design b. Production scheduling c. Cost of purchasing department d. Receipt and inspection of materials e. Machine set-ups f. Product inspection, done for each product g. Plant security h. Customer credit check i Machine operation j. Machine maintenance
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Cost object represents the overall cost of the company related to the product and service of the company. Whereas, cost driver represents the classification of consumed quantity by the company.
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- Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $415,800 Setup 268,800 Inspection 131,200 Shipping 111,600 Customer service 93,800 Total $1,021,200 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Machine Hours Number…Cycle Time, Velocity, Product Costing Mulhall, Inc., has a JIT system in place. Each manufacturing cell is dedicated to the production of a single product or major subassembly. One cell, dedicated to the production of mopeds, has four operations: machining, finishing, assembly, and qualifying (testing). The machining process is automated, using computers. In this process, the model’s frame and engine are constructed. In finishing, the frame is sandblasted, buffed, and painted. In assembly, the frame and engine are assembled. Finally, each model is tested to ensure operational capability. For the coming year, the moped cell has the following budgeted costs and cell time (both at theoretical capacity): Budgeted conversion costs $5,541,120 Budgeted materials $18,668,000 Cell time 35,520 Theoretical output 17,760 models During the year, the following actual results were obtained: Actual conversion costs $5,541,120 Actual materials $4,009,000 Actual cell time…Teach Gear Inc. produces 3 types of office equipment; Bronze, silver and Gold and uses an activity-based product costing system. They have identified 5 activities. Each activity, it costs and related activity driver is summarized below: Activity Material handling Material insertion Activity Units to be produced Orders to be shipped Number of parts per unit Machine hours per unit Labor hours per unit Cost Tasks: Automated Machinery finishing Packaging The following data are provided for each product line: Activity driver Number of parts Number of parts 350,000 Machine hours 150,000 Labor hours 90,000 Orders shipped Bronze P120,000 240,000 6,000 1,200 4. 1 2 Silver 4,000 800 5 2 3 Gold 2,000 400 8 3 لنا Make a narrative recommend the unit cost per unit of Bronze, Silver and Gold using the ABC system. In support of your recommendation show your solution presenting: 1. The computation of the activity cost rates 2. the computation of the estimated volume (TOTAL PARTS, TOTAL MACHINE HOURS,…
- - Chapter Four Activity Cost Pool Machining Machine setups Production design General factory Activity Measure Machining Required information Greenwood Company manufactures two products-13,000 units of Product Y and 5,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity- based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z: Number of setups Number of products Direct labor-hours Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Activity rate Saved Product Y Product Z 8,800 3,200 240 40 1 1 8,800 3,200 5. What is the activity rate for the Product Design activity cost pool? per product SaveProblem 8. Nofat Company produces a product in three departments. The product is cut out of sheet metal in the Cutting Department, then transferred to the Forming Department, where it is bent to shape and certain parts purchased from outside vendors are added to the unit. Finally, the product is transferred to the Finishing Department where it is painted and packaged. The company uses a process costing system with an average cost flow assumption to account for its work in process inventories. Materials are added at two different stages in the Forming Department. Material A is added at the beginning of the process, and MaterialB is added at the end of the process. At the end of May, there were 600 units in process in the Forming Department, 50% complete as to labor and overhead. During June, 3,900 units were received from the cutting Department, and 4,100 units were completed and transferred Department. At the end of June, there were 400 units still in process in the Forming Department,…1
- multiple production department factory i=overhead rate method perfomance Gloves,Inc. produces three size of sports gloves:small,medium and large.A glove pattern is first stenciled onto leather in the Pattern Department,where the gloves is cut and sewed together. Perfomance Gloves uses the multiple production department factiey overhead rate methid of allocating factory overhead costs.Its factory overhead costs were budgeted as follows: The direct labor estimated for each production department was as follows: Direct labor hours are used to allocate the production department overhead to the products.The direct labor hours per unit for each product for eacg production department were obtained from the engineering records as follows: a) Determine the two production department factory overhead rates. b) Use the two production department factory rates to detrmine the factory overhead per unit for each product.A-2Job Order Costing for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances $59,100 17,700 41,400 25,400 $143,600 Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages Total During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages…
- Case N ° 3The industrial company Arica S.A. It treats a raw material A and a raw material B in Workshop 1. At the exit of this workshop a semi-finished or intermediate product is obtained that goes to the warehouse. This semi-finished product is treated again in Workshop 2, and when it leaves the finished products X and Y that enter the warehouse are produced. Regarding its economic organization, the company is divided into the following activity centers (two auxiliary and four main), which allow control over indirect costs: Administration, Energy, Purchasing, Workshop 1, Workshop 2 and Sales. I. Data common to general accounting and cost accounting: The data that constitute the starting situation of Cost Accounting are: a) Opening stocks: - Raw material A (12,000 kg): ¢ 25,200- Raw material B (36,000 kg): ¢ 95,400- Semi-finished product: nothing;- Product X (2,860 units): ¢ 33,088- Product Y (45 units): ¢ 950 b) Purchases of the period: - Raw material A: 24,000 kg at ¢ 2.10 per kg;-…Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $462,000 Setup 289,100 Inspection 142,400 Shipping 129,000 Customer service 51,200 Total $1,073,700 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Machine Hours Number…help me