3) Johnson Superior Products Inc. produces hospital equipment and the setup requirements vary from product to product. Johnson produces its products based on customer orders and uses ABC costing. In one of its indirect cost pools, setup costs and distribution costs are pooled together. Costs in this pool are allocated using number of customer orders for the easiness of costing operations. Based on the information provided, which of the following arguments is valid? A) Johnson has clearly failed to identify as many direct costs as is economically feasible. B) All costs in a homogeneous cost pool have the same or a similar cause-and-effect relationship with the single cost driver that is used as the cost-allocation base for Johnson. C) Johnson has unnecessarily wasted resources by classifying setup and distribution costs as they could have been considered as direct costs. D) Johnson has failed to use the correct cost driver as the cost-allocation base for setup costs.

3) Johnson Superior Products Inc. produces hospital equipment and the setup requirements vary from product to product. Johnson produces its products based on customer orders and uses ABC costing. In one of its indirect cost pools, setup costs and distribution costs are pooled together. Costs in this pool are allocated using number of customer orders for the easiness of costing operations. Based on the information provided, which of the following arguments is valid? A) Johnson has clearly failed to identify as many direct costs as is economically feasible. B) All costs in a homogeneous cost pool have the same or a similar cause-and-effect relationship with the single cost driver that is used as the cost-allocation base for Johnson. C) Johnson has unnecessarily wasted resources by classifying setup and distribution costs as they could have been considered as direct costs. D) Johnson has failed to use the correct cost driver as the cost-allocation base for setup costs.

Name: 3) Johnson Superior Products Inc. produces hospital equipment and the
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: 3) Johnson Superior Products Inc. produces hospital equipment and the setup requirements vary fromproduct to product. Johnson produces its products based on customer orders and uses ABC costing. Inone of its indirect cost pools, setup costs and dist

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Berkeley Inc. produces multiple products and incurs significant amounts indirect costs. Which of the following options would likely help Berkeley improve the accuracy of its indirect cost allocation to its different products? Use a single allocation base to allocate the company's indirect costs instead of having multiple allocation bases Ensure each indirect cost pool contains cost items that are driven by the same cost driver Use actual costing instead of normal costing Group of answer choices Statement 1 only Statement 2 only Statement 3 only Statement 1, 2 and 3 None of above statements
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Which of the following statements is false? (You may select more than one answer.)a. In recent years, most companies have experienced increasing manufacturing overhead costs in relation to direct labor costs.b. Activity-based costing systems may use direct labor-hours and/or machine-hoursto assign unit-level costs to products.c. Facility-level costs are not caused by particular products.d. Product-level costs are larger for high-volume products than for low-volumeproducts.
Organizations are motivated to use multiple indirect cost pools instead of a single indirect cost pool when Select one: O a. Multiple Indirect cost pools are needed to conform to external reporting requirements b. manufacturing overhead costs are difficult to control c. the cost drivers for the multiple indirect cost pools are different from the cost driver of the single indirect cost pool d. none of the options
9..
Which of the following statements is incorrect? O A. If MOH is overallocated to a job that has been sold, and the company calculates sales price by marking up job costs, the job will likely be underpriced. O B. The formula to arrive at the POHR is total budgeted manufacturing overhead divided by total estimated allocation base. O C. To calculate the increase to WIP for allocated MOH costs, the POHR is multiplied by the actual amount of the allocation based used by the cost object. D. "Number of units" is typically not an appropriate allocation base for MOH because the company's products do not consume equal overhead resources. If the over/underallocated MOH is fairly large and the majority of the units have not been sold, the balance in MOH should be prorated between WIP, FG, and COGS. O E.
Part 1: Allocate the costs of the 3 service departments using the direct method. Part 2: Allocate the costs of the 3 service departments using the step method, with the order determined by the greater percentage usage. Part 3: Allocate the costs of the 3 service departments using the reciprical method. Part 4:What is one strength and one drawback of each of the methods?
Overhead application to costs is a critical issue for the costing of your products. We are studying several ways to handle this situation. What would cause an overhead to be overapplied, or underapplied. Discuss the results to your decision making and the financial statements for each of those two situations.
Under which costing system non manufacturing costs will not be included in calculating product costs? a. Absorption costing and Variable costing systems. b. Variable costing system only. C. Absorption costing system only. d. Activity based costing system only. e. None of the given answers
Direction: a. Prepare the entries using the memorandum entry method. b. Give the total number of shares issued, paid in capital at par, additional paid in capital. 5. Prepare the journal entries to record each of the following transactions under the memorandum entry method and present the shareholders' equity section: Feb. 1 Best Securities Corporation was granted by the SEC to issue 1,000,000 shares of stocks at a par value of P10 after it submitted its Articles of Incorporation providing among others a required down payment of at least 30% with the balance to be paid within three months. The articles mentioned four incorporators who subscribed 75,000 shares each at par. A and B gave a down payment of 20% while C and D gave 50%. 14 Best Securities Corporation sold for cash 160,000 ordinary shares at P12 per share to various shareholders. Mar. 14 Gonzalo Enterprises received 320,000 ordinary shares from Best Securities Corporation in exchange for land with a cost of P1, 750,000 but…
Which of the following statements regarding activity-based costing (ABC) is NOT correct? a. Under ABC cost centres are replaced by cost pools b. Blanket overhead recovery rates (OAR) are replaced with cost driver rates c. ABC uses one common overhead recovery rate, such as labour hours. d. ABC tackles the problems of absorption costing by adopting a much more accurate way of charging overhead to cost units.
What from the upcoming options will be made when using the traditional costing method, relatively to using the ABC costing method? Pick only one answer – Underestimating the products cost with products that have low direct costs, and one-time products that are produced in small series. A tight costing connection between the cost and the factor causing it. All the answers are incorect. A higher cost for implementing and managing the accounts managing system, the general and the costing. Overestimating the products cost with products that have low direct costs, and one-time products that are produced in small series.