A manufacturing company uses an activity-based costing system. The company hasthree products: A, B and C. At the beginning of the year, the company made thefollowing estimates of cost and activity for its five activity cost pools:ActivityActivity cost poolLabor-relatedExpectedOverhead cost€280,000Expectedactivity35,000 DLHSmeasureDirect laborhoursPurchase ordersNumber of€12,000158 OrdersordersParts ManagementNumber of€90,00065 Part TypesBoard etchingpart typesNumber of€110,0004,000 ВoardsboardsGeneral factoryМachine€190,00017,000 MHshoursThe expected activity rate for theproducts as follows:year was distributedamongthecompany'sthreeExpected ActivityProduct BActivity Cost PoolProduct AProduct CLabor-related (DLHS)6,0006011,000304,00040Purchase ordersParts managementBoard etchingGeneral factory3015405009006003,0008,0003,000a) Compute the activity rate for each activity cost poolb) Using the above data, determine the total amount of overhead cost assigned toproducts B.

Overhead is the cost incurred by an entity on the production or selling of the goods.

A manufacturing company uses an activity-based costing system. The company has three products: A, B and C. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Activity cost pool Labor-related Expected Overhead cost €280,000 Expected activity 35,000 DLHS measure Direct labor hours Purchase orders Number of orders €12,000 158 Orders Parts Management Number of €90,000 65 Part Types part types Number of Board etching €110,000 4,000 Boards boards Machine General factory €190,000 17,000 MHs hours The expected activity rate for the year was distributed among the company's three products as follows: Expected Activity Product B Activity Cost Pool Product A Product C Labor-related (DLHS) Purchase orders 6,000 4,000 11,000 30 60 40 Parts management Board etching General factory 30 15 40 500 900 600 3,000 8,000 3,000 a) Compute the activity rate for each activity cost pool b) Using the above data, determine the total amount of overhead cost assigned to products B.

A manufacturing company uses an activity-based costing system. The company has three products: A, B and C. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Activity cost pool Labor-related Expected Overhead cost €280,000 Expected activity 35,000 DLHS measure Direct labor hours Purchase orders Number of orders €12,000 158 Orders Parts Management Number of €90,000 65 Part Types part types Number of Board etching €110,000 4,000 Boards boards Machine General factory €190,000 17,000 MHs hours The expected activity rate for the year was distributed among the company's three products as follows: Expected Activity Product B Activity Cost Pool Product A Product C Labor-related (DLHS) Purchase orders 6,000 4,000 11,000 30 60 40 Parts management Board etching General factory 30 15 40 500 900 600 3,000 8,000 3,000 a) Compute the activity rate for each activity cost pool b) Using the above data, determine the total amount of overhead cost assigned to products B.

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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S Activity Cost Pool Labor-related Purchase orders Product testing Template etching General factory Activity Cost Pool Labor-related (DLHS) Activity Measure Direct labor-hours Number of orders Number of tests Number of templates Machine-hours Product A Product B Product C Product D Cost $ 19,250 $ 1,820 $ 6,320 $ 960 $ 68,600 Total Overhead Cost 2. The expected activity for the year was distributed among the company's four products as follows: Expected Activity 1,375 DLHS Expected Activity Product A Product B Product C Product D 300 650 125 300 20 65 180 190 Purchase orders (orders) Product testing (tests) 65 0 80 Template etching (templates) 250 0 26 10 4 General factory (MHs) 3,800 2,000 1,200 2,800 Using the ABC data, determine the total amount of overhead cost assigned to each product. 455 orders 395 tests 40 templates S 9,800 MHs
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…
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
Linger Products uses a two-stage allocation method to assign costs to its products. The following information has been provided for March: Product 1 Product 2 Total Units 3,000 2,000 5,000 Machine hours 2,000 4,000 6,000 Direct labor hours 2,000 2,000 4,000 Direct materials $ 60,000 $ 60,000 $ 120,000 Direct labor 45,000 45,000 90,000 Manufacturing overhead Utilities (machine related) $ 3,000 Supplies (labor related) 8,000 Training (labor related) 20,000 Supervision (labor related) 17,000 Machine depreciation (machine related) 24,000 Lease on factory (machine related) 33,000 Miscellaneous (labor related) 5,000 Total manufacturing overhead $ 110,000 Required:(a) Allocate the manufacturing overhead to two cost pools: machine-related and labor-related.(b)…
Assume a company manufactures only two products—14,000 units of Product C and 6,000 units of Product D. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products C and D: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 300,000 15,000 MH Machine setups Number of setups $ 150,000 200 Setups Product design Number of products $ 78,000 2 Products Activity Measure Product C Product D Machine-hours 9,000 6,000 Number of setups 50 150 Number of products 1 1 Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product D? Multiple Choice $271,500 $261,500 $301,500 $251,500
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Wilmington Company has two manufacturing departments--Assembly and Fabrication. It considers all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set of data relates to one particular job completed during the year-Job Bravo. Estimated Data Manufacturing overhead costs Direct labor-hours Machine-hours Job Bravo Direct labor-hours Machine-hours Assembly $1,400,000 70,000 28,000 Assembly Fabrication 15 7 7 10 Fabrication Total $1,680,000 $3,080,000 Total 22 17 42,000 140,000 112,000 168,000 Required: 1. If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo? 2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication, how much manufacturing overhead would be applied…