Vanderbilt Metal Works produces two types of metal lamps. Vanderbilt manufactures24.640 basic lamps and 6,250 designer lamps. Its activity-based costing system usestwo indirect-cost pools. One cost pool is for setup costs and the other for generalmanufacturing overhead. Vanderbilt allocates setup costs to the two lamps based onsetup labor-hours and general manufacturing overhead costs on the basis of direct manu-facturing labor-hours. It provides the following budgeted cost information:5-2Designer LampsTotalBasic Lamps$ 5$19Direct materials per lampDirect manufacturing labor-hours per lampDirect manufacturing labor rate per hourSetup costsLamps produced per batchSetup-hours per batchGeneral manufacturing overhead costs0.4 hours0.5 hours$30$30$130,800320501 hour2 hours$ 89,877Calculate the total budgeted costs of the basic and designer lamps using Vanderbilt'sactivity-based costing system.

Activity-based costing system is a cost accounting system in which overheads are grouped into cost…

Answered: activity-based costing system.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 1CMA: Pelder Products Company manufactures two types of engineering diagnostic equipment used in...

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Medical Tape makes two products: Generic and Label. It estimates it will produce 423,694 units of Generic and 652,200 of Label, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: How much is the overhead allocated to each unit of Generic and Label?
Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Eclipse: Direct machine hours were estimated as follows: In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows: a. Determine the per-unit factory overhead allocated to the commercial and residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. b. Determine the per-unit factory overhead allocated to the commercial and residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. c. Recommend to management a product costing approach, based on your analyses in (a) and (b). Support your recommendation.
Sanford, Inc., has developed value-added standards for four activities: purchasing parts, receiving parts, moving parts, and setting up equipment. The activities, the activity drivers, the standard and actual quantities, and the price standards for 20x1 are as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: 1. Prepare a cost report that lists the value-added, non-value-added, and actual costs for each activity. 2. Which activities are non-value-added? Explain why. Also, explain why value-added activities can have non-value-added costs.
Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: a. Determine the activity rate for each activity. b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round to the nearest cent.
Stacks manufactures two different levels of hockey sticks: the Standard and the Slap Shot. The total overhead of $600,000 has traditionally been allocated by direct labor hours, with 400,000 hours for the Standard and 200.000 hours for the Slap Shot. After analyzing and assigning costs to two cost pools, it was determined that machine hours is estimated to have $450.000 of overhead, with 30,000 hours used on the Standard product and 15,000 hours used on the Slap Shot product. It was also estimated that the inspection cost pool would have $150,000 of overhead, with 25,000 hours for the Standard and 5,000 hours for the Slap Shot. What is the overhead rate per product, under traditional and under ABC costing?
Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Silven produces two models of cell phones with the following expected activity demands: 1. Determine the total overhead assigned to each product using the four activity drivers. 2. Determine the total overhead assigned to each model using the two most expensive activities. The costs of the two relatively inexpensive activities are allocated to the two expensive activities in proportion to their costs. 3. Using ABC as the benchmark, calculate the percentage error and comment on the accuracy of the reduced system. Explain why this approach may be desirable.
Duke Metal Works produces two types of metal lamps. Duke manufactures 24,000 basic lamps and 4,500 designer lamps. Its activity-based costing system uses two indirect-cost pools. One cost pool is for set up costs and the other for general manufacturing overhead. Duke allocates set up costs to the two lamps based on setup labor-hours and general manufacturing overhead costs on basis of direct manufacturing labor-hours. It provides the following budgeted cost information: (Click the icon to view the information.) Calculate the total budgeted costs of the basic and designer lamps using Duke's activity-based costing system. Begin by calculating the overhead rates for each of the two indirect-cost pools; set up costs and general manufacturing overhead. First select the formula, then enter the applicable amounts and calculate the rate. Begin with the overhead rate for set up costs. (Abbreviations used: MOH = Manufacturing Overhead.) Data table = Direct materials per lamp Direct manufacturing…
Georgetown Metal Works produces two types of metal lamps. Georgetown manufactures 17,500 basic lamps and 6,160 designer lamps. Its activity-based costing system uses two indirect-cost pools. One cost pool is for setup costs and the other for general manufacturing overhead. Georgetown allocates setup costs to the two lamps based on setup labour-hours and general manufacturing overhead costs on the basis of direct manufacturing labour-hours. It provides the following budgeted cost information. (Click the icon to view the information.) Calculate the total budgeted costs of the basic and designer lamps using Georgetown' activity-based costing system. Begin by calculating the overhead rates for each of the two indirect-cost pools: setup costs and general manufacturing overhead. First select the formula; then enter the applicable amounts and calculate the rate. Begin with the overhead rate for set up costs. (Round the budgeted rate to the nearest dollar. Abbreviations used: MOH =…
Amherst Metal Works produces two types of metal lamps. Amherst manufactures 20,000 basic lamps and 5,000 designer lamps. Its activity-based costing system uses two indirect-cost pools. One cost pool is for set up costs and the other for general manufacturing overhead. Amherst allocates setup costs to the two lamps based on setup labor-hours and general manufacturing overhead costs on the basis of direct manufacturing labor-hours. It provides the following budgeted cost information Basic Lamps Designer Lamps Total Direct materials per lamp $ 8 $ 15Direct manufacturing labor-hours per lamp 0.5 hours 0.6 hoursDirect manufacturing labor rate per hour $ 20 $ 20Setup costs $ 114,000Lamps produced per batch 250 50Setup-hours per batch 1 hour 3 hoursGeneral manufacturing overhead costs $ 120,000 Calculate the total budgeted costs of the basic and designer lamps using Amherst's activity-based costing system. calculate the overhead rate for general manufacturing overhead. (Abbreviations…
An activity based costing system is being considered at Evelia, nv to assign products overhead costs; these overhead costs are currently assigned strictly by number of units produced. First, the two overhead costs of Rent expense and Insurance expense would be allocated to three activity cost pools - Finishing, Sanding, and Other - based on resource consumption. The information used to perform these allocations is below: Overhead Costs: Rent expense: $2,000,000 Insurance expense: $1,650,000 Distribution of Resource Consumption across Activity Cost Pools: Overhead Cost Activity Cost Pools Finishing Sanding Other Rent expense 0.45 0.25 0.30 Insurance expense 0.20 0.35 0.45 In the second stage, Finishing costs would be assigned to products using direct labor hours and Sanding costs would be assigned to products using the number of machine hours. The costs in the Other activity pool would not be assigned to products. Activity data for the company's two products is as…
Shalom Company uses three activity pools to apply overhead to its products. Each activity has a cost driver used to allocate the overhead costs to the product. The activities and related overhead costs are as follows: product design P40,000; machining P300,000; and material handling P100,000. The cost drivers and estimated use are as follows: Activity Cost Pools Activities Product design Number of product changes Machining Machine hours Material handling Number of set-ups X Estimated Use of Cost Driver Per Activity Amounts must be in whole numbers. Example: 88,000 or (88,000) Unit costs be in whole numbers. Example: 88 Format of percentages: 88% Words must be in capital letters. 10 150,000 100 What is the activity-based overhead rate for material handling? J
Joker Company manufactures three types of televisions: Model A, B and C. The company uses the activity-based costing, has identified five activities and its related cost drivers. Each activity, budgeted cost and related cost driver are as follows: (a) Materials handling, P112,500, number of parts; (b) Materials insertion, P1,237,500; number of parts; (c) Automated machinery, P420,000, machine hours; (d) Finishing, P85,000, direct labor hours; and (e) Packaging, P85,000, order shipped. The following information pertains to each product line for next year: (f) units produced (A, 5,000; B, 2,500; C, 1,000); (g) orders to be shipped (A 500, B 250, C 100); (h) number of parts per unit (A 5, B 7.50; C 12.50); (i) machine hours per unit (A 0.50; B 1.50; C 2.50) and (j) labor hours per unit (A 1; B 1, C 1). Under the activity-based costing, what is the total costs of C? P440,000 P228,235 P680,000 P570,588

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