a. Determine the activity rates for each of the three nonmanufacturing activity pools.
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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- Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas: Cost Cost Formula Cost of good sold $30 per unit sold Advertising expense $186,000 per quarter Sales commissions 8% of sales Shipping expense ? Administrative salaries $96,000 per quarter Insurance expense $10,600 per quarter Depreciation expense $66,000 per quarter Management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. Units sold and the related shipping expense over the last eight quarters follow: Quarter Units Sold ShippingExpense Year 1: First 32,000 $ 176,000…The AB division sells goods internally to the CD division of the same company. The quoted external price in industry publications from a supplier near AB is P200 per ton plus transportation. It costs P20 per ton to transport the goods to CD. AB’s actual market cost per ton to buy the direct materials to make the transferred product is P100. Actual per ton direct labor is P50. Other actual costs of storage and handling are P40. The company president selects a P220 transfer price. This is an example of: Cost-based transfer pricing. Cost plus 20% transfer pricing. Market-based transfer pricing. Negotiated transfer pricing.The Dodson Company manufactures and distríbutes three types of electronic products, Zymol, Zybat and Zycot. The following details the unit sales, selling prices and manufacturing costs of the three electronic devices: Zymol $100 Zybat $120 Zycot $180 Sales Price Manufacturing Cost $60 $80 $110 Number ofunits sold 15,000 13,000 12,000 Selling, general and administrative(SG&A) expenses are $1,170,000. SG&Aexpenses are currently being allocated based upon sales revenue for the three products. The Dodson Companyis considering allocating SG&A expenses underan activity based costing methodology as follows: Upon further investigation of the SG&A expenses, (50 percent) are shown to be for marketing and advertising. Each product has its own advertising and marketing budget, administered by one of the three marketing managers. Zycot, the premier product, is advertisedheavily. Sixty percent of the marketing and advertising budget goes toward Zycot, twenty percent to Zymol and twenty percent to…
- Cullumber Company makes three models of tasers. Information on the three products is given below. Sales Variable expenses Contribution margin Fixed expenses Net income (a) Net income $ (b) Shocker Net Income Tingler $300,000 $500,000 Tingler Net Income $ Total Net Income (c) Why or why not? Compute current net income for Cullumber Company. ta Net income would 151,400 148,600 $ 119,400 S $29,200 Fixed expenses consist of $298,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $30,000 (Tingler), $80,800 (Shocker), and $34,300 (Stunner). The common costs will be incurred regardless of how many models are produced. The direct fixed expenses would be eliminated if that model is phased out. James Watt, an executive with the company, feels the Stunner line should be discontinued to increase the company's net income. Shocker 197,000 303,000 229,800 $73,200 Compute net income by product line and in total for…The XYZ Company produces and sells two products: The Riffs and The Raffs. Below is revenue and cost information to facilitate the development of a basic segmented income statement. Product Riffs Raffs Sales Price per unit $8.00 6.00 Variable Cost per unit $3.20 3.00 Traceable Fixed Costs $62,000 $44,000 It is expected that the company will incur $21,000 of common fixed expenses and unit sales are expected to be 12,000 of Riffs and 18,000 of Raffs. Required: Construct a Contribution Format Income Statement segmented by product line and company total.Patterson Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PATTERSON COMPANY Income Statements for the Year 2014 Segment Sales А В С $169,000 $243,000 $258,000 (80,000) (31,000) (121,000) (17,000) Cost of goods sold Sales commissions (88,000) (30,000) Contribution margin General fixed oper. exp. (allocation of president's salary) Advertising expense (specific to individual divisions) 132,000 31,000 140,000 (34,000) (48,000) (32,000) (6,000) (11,000) (9,000) $73,000 $108,000 Net income Required: a. Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Effect on income b. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. PATTERSON COMPANY Comparative Income Statements for the Year 2014 Eliminate Seg. A Keep Seg.A Decision Sales Cost of goods…
- Indigo, Ltd., manufactures boats and personal watercraft. The company operates three separate divisions: yachts, sailboats, and jet skis. The company's latest income statement is presented by product line as follows: Sales revenue Variable cost of goods sold Fixed cost of goods sold Gross profit Variable operating expenses Fixed operating expenses Allocated corporate costs Operating income (a) V V Yachts $ 61,430,000 31,051,000 ✓ 9,005,000 21,374,000 8,007,000 4,021,000 3,016,000 Sailboats $ 22,820,000 12,200,000 5,010,000 $ 5,610,000 2,036,000 $ 6,330,000 $ 1,034,000 $ 1,510,000 1,030,000 Yachts Jet Skis $ 6,442,000 3,595,000 701,000 2,146,000 853,000 321,000 11 1,028,000 $ (56,000) $ Total $ 90,692,000 Prepare a segment margin income statement showing each of the three divisions. Fixed cost of goods sold and fixed operating expenses can be traced to each product line. (If the amount is negative then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g.…Lucille Inc manufactures a product that gives rise to a by product called "Robon". The only cost associated with Robon are additional processing cost of P1.00 for each unit. Lucille accounts for Robon sales first by deducting its separable costs from such sales and then by deducting this net amount from the cost of sales of the major product. For the past year, 2,000 units of Robon were produced which were sold for P3.00 each. Sales revenue and cost of goods sold from the main product were P500,000 and P400,00 respectively. Required: If Lucille changes its method of accounting for Roblon sales by showing the net amount as "other income", the effect on gross margin would be (increase of decrease of what amount?) The gross martin after considering the by product sales and costs would beAtascadero Industries operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow. Capacity (units) Sales price Variable costs Fixed costs Manufacturing 1,070,000 1,750 630 $ $ a. Transfer price b. Transfer price $10,700,000 a For Manufacturing, this is the price to third parties. b For Marketing, this does not include the transfer price paid to Manufacturing. Marketing 507,000 $ 4,900 $ 1,820 $7,270,000 Required: a. Current production levels in Manufacturing are 607,000 units. Marketing requests an additional 107,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? per unit per unit
- Spectrum Corp. makes two products: C and D. The following data have been summarized: (Click the icon to view the data.) Spectrum Corp. desires a 27% target gross profit after covering all product costs. Considering the total product costs assigned to the Products C and D, what would Spectrum have to charge the customer to achieve that gross profit? Round to two decimal places. Begin by selecting the formula to compute the amount that the company should charge for each product. Total product cost per unit Spectrum should charge 2091.10 for Product C. Data table Direct materials cost per unit Direct labor cost per unit Indirect manufacturing cost per unit Total costs assigned Print Product cost as a percentage of sales price Product C $ 900.00 $ 400.00 226.50 $ 1,526.50 $ Done Product D 2,400.00 100.00 531.00 3,031.00 X = Required sales price per unit GAnson Corp. manufactures a product that yields the by-product, "Yum". The only costs associated with Yum are selling costs of PO.10 for each unit sold. Anson accounts for sales of Yum by deducting Yum's separable costs from Yum's sales, and then deducting this net amount from the major product's cost of goods sold. Yum's sales were 100,000 units at P1 each. If Anson changes its method of accounting for Yum's sales by showing the net revenue as other income, then net income wouldFor the next 2 items. Markgil Corp. manufactures a product that yields the by-product "Yum". The only costs associated with Yum are selling costs of P.10 for each unit sold. Abel accounts for sales of Yum by deducting Yum's separable costs from Yum's sales, and then deducting this net amount from the major product's cost of goods sold. Yum's sales were 100,000 units at P1.00 each. If Markgil changes its method of accounting for Yum's sales by showing the net amount as additional sales revenue, then Markgil's gross margin would * a. Increase by P90,000 b. Decrease by P90,000 c. Increase by P100,000 d. Increase by P100,000 e. Be unaffected If Markgil changes its method of accounting for Yum's sales by showing the net amount as other income, then Markgil's gross margin would * a. Increase by P90,000 b. Decrease by P90,000 c. Increase by P100,000 d. Increase by P110,000 e. Be unaffected