A local picnic table manufacturer has budgeted these overhead costs:Purchasing$80,000Handling Materials34,540Machine Setups63,000Inspections25,000Utilities25,500They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown:Cost DriverActivityOrdersMaterial MovesB001,340Machine Setups14,000Number of Inspections5,000Square Feet190,000Recent success has yielded an order for 900 tables. Assume direct labor costs per hour of $25.ActivityOrder, UnitsDirect MaterialsMachine HoursDirect Labor HoursNumber of Purchase OrdersNumber of Material MovesNumber of Machine SetupsNumber of InspectionsDirect MaterialsDirect LaborNumber of Material Moves900Number of Machine SetupsNumber of InspectionsNumber of Square Feet OccupiedTotal Order Cast112,70015,3005,300Number of Square Feet OccupiedDetermine how much the job would cast given the following activities: Do not round Intermediate computations and round final answers to nearest whole number.Cost Assigned707501004009,000

Activity-based costing (ABC) analysis can be defined as a method of assigning overhead costs on the…

A local pictable manufacturer has budgeted these overhead costs $80,000 34,540 61,000 25,000 28,500 Handling Material They are considering adapting ABC coating and have estimated the cost drivers for each pool as shown Cost Driver Activity Orders 14,000 1,000 190,000 Recent success has yielded an order for 900 tables. Assume direct labor costs per hour of $25. Activity Number of Inspections Order, Unite Direct Material Machine Hours Direct Laber Hours Number of Purchase Orders Number of Material ove 800 1,340 Direct Materials Direct Laber Number of Material Move Number of ch Number of Inspections Number of Square Feat Occupied Total Order Cast 900 113,700 1,300 Number of Machine Setup Number of Inspectio 400 Number of Square Feet Oud 9,000 Determine how much the job would cost given the following activities: Do not round Intermediate computations and round final answers to nearest whole number Cost Assigned 750

A local pictable manufacturer has budgeted these overhead costs $80,000 34,540 61,000 25,000 28,500 Handling Material They are considering adapting ABC coating and have estimated the cost drivers for each pool as shown Cost Driver Activity Orders 14,000 1,000 190,000 Recent success has yielded an order for 900 tables. Assume direct labor costs per hour of $25. Activity Number of Inspections Order, Unite Direct Material Machine Hours Direct Laber Hours Number of Purchase Orders Number of Material ove 800 1,340 Direct Materials Direct Laber Number of Material Move Number of ch Number of Inspections Number of Square Feat Occupied Total Order Cast 900 113,700 1,300 Number of Machine Setup Number of Inspectio 400 Number of Square Feet Oud 9,000 Determine how much the job would cost given the following activities: Do not round Intermediate computations and round final answers to nearest whole number Cost Assigned 750

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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ABC Company has an ABC system with three pools: Total cost in cost pool Activity Machine setups Customer service Maintenance $18,500 $5,000 Cost Driver $29,000 #setups O $9,000 #orders not enough information machine- hours $13,000 $6,000 $10,000 Compute total capacity costs allocated to product X. Activity volume (#cost driver units) Product X Product Y Total 45 15 25 20 5 25 65 20 50
< Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Expected Cost Activity Driver Activity Capacity Number of setups Number of orders Activity Setting up equipment Ordering costs Machine costs Receiving Receiving hours Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Direct materials Direct labor Units completed Direct labor hours Number of setups Number of orders Machine hours Receiving hours $464,550 Required: 336,300 747,000 424,200 Model A Machine hours $604,000 498,000 17,000 5,800 410 Model B $804,000 456,000 8,700 1,500 6,200 23,500 3,800 The company's normal activity is 7,300 direct labor hours. 160 11,500 18,000 6,300 570 17,700 41,500 10,100 1. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent.
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Hayward Industries manufactures dining chairs and tables. The following information is available: Machine setups Inspections Dining Chairs Tables Total Overhead Cost 200 600 $48,000 250 470 $72,000 2,600 2,400 Labor hours Hayward is considering switching from Traditional Costing based on labor hours to activity-based costing. Assign total overhead costs to Tables using Activity Based Costing. $120,000 $62,400 $83,000 $37,000 $57,600
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You make widgets, which is a subassembly for you main product of whatsup. An outside vendor has provided you with a quote to supply the widget part for $ 72.00 per unit Your cost records show the following: Your projected production for the widget is 12,500 units Item of Cost Per Unit Cost Direct Material $18.75 Direct Labor $38.00 Variable manufacturing overhead $9.25 Lease on manufacturing facility $36,000.00 per year Depreciation of equipment $2.50 Allocated Corporate Expenses $1.25 If this offer is accepted, you can sublease the manufacturing facility for $15,000 per year All direct and variable costs can be avoided. The equipment has no salvage value How much would net operating income be changed if the outside supplier offer was accepted? Show all calculations for full credit
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Station 9 ¾ Corporation manufacturers railroad tracks. They are currently using a traditional system, with machine hours as the cost driver. They are considering converting to an ABC system, and want a comparison of the two. Station 9 ¾ has identified the following activity information: Activity Cost Driver Est. Cost Driver Volume Est. Cost Pool Machining Machine Hours 12,000 $119,000 Assembly Direct Labor Hours 15,800 $107,000 Setup Number of Setups 9 $24,300 Total $250,300 The actual cost driver volume that occurred during the production process is below: Machine Hours 8,600 Direct Labor Hours 9,700 Number of Setups 7 What is the Difference between traditional and ABC system?
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Gerber Clothing Inc. has designed a rain suit for outdoor enthusiasts that is about to be introduced on the market. A standard cost card has been prepared for the new suit, as follows: Standard Quantity or hours Standard price or Rate Standard Direct materials 2.2 metres Direct labour 1.0 hours Manufacturing overhead (1/6 variable) 1.0 hours $ 15 per metre 33 per hour 21 per hour Cost $33.00 Total standard cost per suit 33.00 21.00 $87.00 a. The only variable selling and administrative costs will be $6 per suit for shipping. Fixed selling and administrative costs will be as follows (per year): Salaries Advertising and other Total $ 35,400 157,000 $192,400 b. Since the company manufactures many products, it is felt that no more than 10,500 hours of labour time per year can be devoted to production of the new suits. c. An investment of $550,000 will be necessary to carry inventories and accounts receivable and to purchase some new equipment. The company wants a 20% ROI in new product…
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