5. Lemuel Office Equipment Corporation manufactures two types of filing cabinets-Deluxeand Executive-and applies manufacturing overhead to all units at the rate of P80 permachine hour. Production information follows.Direct-material costDirect-labor costDeluxeP4025ExecutiveP6525Budgeted volume (units)16,00030,000The controller, who is studying the use of activity-based costing, has determined that thefirm's overhead can be identified with three activities: manufacturing setups, machineprocessing, and product shipping. Data on the number of setups, machine hours, andoutgoing shipments, which are the activities' three respective cost drivers, follow.SetupsMachine hoursOutgoing shipmentsDeluxe10032,000200Executive6045,000150Total16077,000350The firm's total overhead of P6,160,000 is subdivided as follows: manufacturing setups,P1,344,000; machine processing, P3,696,000; and product shipping, P1,120,000.waury.3. Is the cost of the Deluxe filing cabinet overstated or understated (i.e., distorted) bythe use of machine hours to allocate total manufacturing overhead to production? Byhow much?4. Calculate the aggregate amount by which the Deluxe cabinet line is undercosted bythe company's current traditional overhead costing procedures. Then calculate theaggregate amount by which the traditional system overcosts the Executive cabinetline.5. Assume that the current selling price of a Deluxe filing cabinet is P270 and themarketing manager is contemplating a P30 discount to stimulate volume. Is thisdiscount advisable? Briefly discuss.

Name: 5. Lemuel Office Equipment Corporation manufactures two types of fili
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: 5. Lemuel Office Equipment Corporation manufactures two types of filing cabinets-Deluxeand Executive-and applies manufacturing overhead to all units at the rate of P80 permachine hour. Production information follows.Direct-material costDirect-labor

Answer - Part 4 - Calculation of aggregate amount by which cabinet is undercosted- Deluxe…

Business

Accounting

5. Lemuel Office Equipment Corporation manufactures two types of filing cabinets-Deluxe and Executive-and applies manufacturing overhead to all units at the rate of P80 per machine hour. Production information follows. Delxe P40 25 16,000 Executive P65 25 Direct-material cost Direct-labor cost Budgeted volume (units) 30,000 The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities' three respective cost drivers, follow. Deluxe 100 32,000 200 Executive 60 45,000 150 Total 160 7,000ר 350 Setups Machine hours Outgoing shipments The firm's total overhead of P6,160,000 is subdivided as follows: manufacturing setups, P1,344,000; machine processing, P3,696,000; and product shipping, P1,120,000. 3. Is the cost of the Deluxe filing cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much? Fune

5. Lemuel Office Equipment Corporation manufactures two types of filing cabinets-Deluxe and Executive-and applies manufacturing overhead to all units at the rate of P80 per machine hour. Production information follows. Delxe P40 25 16,000 Executive P65 25 Direct-material cost Direct-labor cost Budgeted volume (units) 30,000 The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities' three respective cost drivers, follow. Deluxe 100 32,000 200 Executive 60 45,000 150 Total 160 7,000ר 350 Setups Machine hours Outgoing shipments The firm's total overhead of P6,160,000 is subdivided as follows: manufacturing setups, P1,344,000; machine processing, P3,696,000; and product shipping, P1,120,000. 3. Is the cost of the Deluxe filing cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much? Fune

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

Spacely, Corp. makes sprockets in two models: regular and professional, and wants to refine its costing system by allocating overhead using departmental rates. The estimated $843,100 of manufacturing overhead has been divided into two cost pools: Assembly Department and Packaging Department.The following data has been compiled: Spacely, Corp. Assembly Department Packaging Department Total Overhead costs $550,000 $293,100 $843,100 Machine Hours: Regular Model 153,000 35,100 188,100 Professional Model 352,400 12,600 365,000 Direct Labor Hours: Regular Model 40,300 80,600 120,900 Professional Model 322,700 413,400 736,100 (Round your answers to two decimal places when needed and use rounded answers for all future calculations).
Rex Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity. Round your answers to two decimal places. Overhead Overhead Annual Rate per Activity per Activity Usage Activity Machine Setups $157,850 4,100 $ Machine Hours 324,622 14,114 2$ Inspections 119,000 3,400
Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows: Cost Pool Allocation Base Overhead Rate Materials handling Number of parts $.08 Machining Machine hours $7.20 Assembling Number of parts $.35 Packaging Number of finished units $2.70 What is the cost of machining per ceiling fan? Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows: Cost Pool Allocation Base Overhead Rate Materials handling Number of parts $.08 Machining Machine hours $7.20 Assembling Number of parts $.35 Packaging Number of finished units $2.70 What is the cost of machining per ceiling fan? $144.00 $18.00 $180.00 $30.00
Multiple Choice $9,907.97 $89,171.73 $5,173.02 $136.51
Helm Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: Costs: Manufacturing overhead Selling and administrative expenses Total Distribution of resource consumption: Manufacturing overhe Selling and administrative expenses Activity Cost Pools Customer Support 85% 20% Order Size 5% 60% S O $348,000 O $188,500 $29,000 O $84,000 S Other 10% 20% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. 480,000 100,000 580,000 You have been asked to complete the first-stage allocation of costs to the activity cost pools. Total 100% 100% How much cost, in total, would be allocated in the first-stage allocation to the Order Size activity cost pool? Next ▸
Dog
Rahul
Edney Company employs a standard cost system for product costing. The per-unit standard cost of its product is: Raw materials Direct labor (2 direct labor hours x $8.00 per hour) Manufacturing overhead (2 direct labor hours x $12.20 per hour) $ 14.00 16.00 24.40 $ 54.40 Total standard cost per unit The manufacturing overhead rate is based on a normal capacity level of 600,000 direct labor hours. The firm has the following annual manufacturing overhead budget: Variable Fixed $ 3,960,000 3,360,000 $ 7,320,000 Edney incurred $434,550 in direct labor cost for 54,100 direct labor hours to manufacture 26,000 units in November. Other costs incurred in November include $296,000 for fixed manufacturing overhead and $342,000 for variable manufacturing overhead. Required: 1. Determine each of the following for November. [Note: Indicate whether each variance is favorable (F) or unfavorable (U).] a. The variable overhead rate (spending) variance. b. The variable overhead efficiency variance. c. The…
Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining. $2400000; and assembling. $1200000. Information on the two products is: Direct labor hours Machine hours Number of parts Regular Supreme 10000 15000 30000 90000 160000 Ⓒ$2568000 $1440000. $2160000. $1032000. 10000 Overhead applied to Regular using activity-based costing is
Maxey & Sons manufactures two types of storage cabinets—Type A and Type B—and applies manufacturing overhead to all units at the rate of $120 per machine hour. Production information follows. Type A Type BAnticipated volume (units) 24,000 45,000 Direct-material cost per unit $ 28 $ 42 Direct-labor cost per unit 33 33 The controller, who is studying the use of activity-based costing, has determined that the firm’s overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities’ three respective cost drivers, follow. Type A Type B TotalSetups 140 100 240 Machine hours 48,000 67,500 115,500 Outgoing shipments 200 150 350 The firm’s total…
Helm Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Costs: Manufacturing overhead Selling and administrative expenses Total Distribution of resource consumption: Manufacturing overhead Selling and administrative expenses $304,500 $493,000 Activity Cost Pools Customer Support 85% 20% O $116,000 O $428,000 Order Size 5% 60% S S Other 10% 20% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools. How much cost, in total, would be allocated in the first-stage allocation to the Customer Support activity cost 480,000 100,000 580,000 Total 100% 100%
Spacely, Corp. makes sprockets in two models: regular and professional, and wants to refine its costing system by allocating overhead using departmental rates. The estimated $843,100 of manufacturing overhead has been divided into two cost pools: Assembly Department and Packaging Department.The following data has been compiled: Spacely, Corp. Assembly Department Packaging Department Total Overhead costs $550,000 $293,100 $843,100 Machine Hours: Regular Model 153,000 35,100 188,100 Professional Model 352,400 12,600 365,000 Direct Labor Hours: Regular Model 40,300 80,600 120,900 Professional Model 322,700 413,400 736,100 (Round your answers to two decimal places when needed and use rounded answers for all future calculations).1. Compute the predetermined overhead allocation rates using machine hours as the allocation base for the Assembly Department and direct labor hours for the Packaging Department.