Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $396,000 Setup 280,700 Inspection 88,800 Shipping 122,400 Customer service 58,500 Total $946,400 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Customer Number of Number of Number of Service Setups Customer Orders Machine Hours Inspections Requests Units

Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $396,000 Setup 280,700 Inspection 88,800 Shipping 122,400 Customer service 58,500 Total $946,400 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Customer Number of Number of Number of Service Setups Customer Orders Machine Hours Inspections Requests Units

Name: Activity-Based Product CostingSweet Sugar Company manufactures three
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Description: Activity-Based Product CostingSweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has askedthe controller to conduct an activity-based costing study. Th

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $415,800 Setup 268,800 Inspection 131,200 Shipping 111,600 Customer service 93,800 Total $1,021,200 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Machine Hours Number…
Support Department Cost Allocation-Direct Method Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitorial costs are allocated based on machine hours used and the number of trees in each department, respectively. The company estimates that the cutting and pruning areas typically have about 7 and 63 trees, respectively, in them at 1 time. The company also estimates that the cutting process requires about 9 times as many machine hours as the pruning process. The total costs of each department are as follows: Maintenance Department Janitorial Department Cutting Department Pruning Department $8,000 3,000 57,000 13,000 Using the direct method of support department cost allocation, determine the total cost of each production department after allocating all support costs to the production…
Teach Gear Inc. produces 3 types of office equipment; Bronze, silver and Gold and uses an activity-based product costing system. They have identified 5 activities. Each activity, it costs and related activity driver is summarized below: Activity Material handling Material insertion Activity Units to be produced Orders to be shipped Number of parts per unit Machine hours per unit Labor hours per unit Cost Tasks: Automated Machinery finishing Packaging The following data are provided for each product line: Activity driver Number of parts Number of parts 350,000 Machine hours 150,000 Labor hours 90,000 Orders shipped Bronze P120,000 240,000 6,000 1,200 4. 1 2 Silver 4,000 800 5 2 3 Gold 2,000 400 8 3 لنا Make a narrative recommend the unit cost per unit of Bronze, Silver and Gold using the ABC system. In support of your recommendation show your solution presenting: 1. The computation of the activity cost rates 2. the computation of the estimated volume (TOTAL PARTS, TOTAL MACHINE HOURS,…
Support Department Cost Allocation-Direct Method Charlie's Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitorial and Security departments support the Cutting and Assembly departments. The Assembly Department spans about 48,720 square feet and holds assets valued at about $79,040. The Cutting Department spans about 35,280 square feet and holds assets valued at about $128,960. Charlie's Wood Works allocates support department costs using the direct method. If costs from the Janitorial Department are allocated based on square feet and costs from the Security Department are allocated based on asset value. a. Determine the percentage of Janitorial costs that should be allocated to the Assembly Department. % b. Determine the percentage of Security costs that should be allocated to the Cutting Department. % All work saved. Û ✰ O 0 0 В B Previous Next
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Support Department Cost Allocation-Direct Method Charlie's Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitori and Security departments support the Cutting and Assembly departments. The Assembly Department spans about 50,400 square feet and holds assets valued at abo $88,000. The Cutting Department spans about 33,600 square feet and holds assets valued at about $132,000. Charlie's Wood Works allocates support department ce using the direct method. If costs from the Janitorial Department are allocated Based on square feet and costs from the Security Department are allocated based on a value. a. Determine the percentage of Janitorial costs that should be allocated to the Assembly Department. % b. Determine the percentage of Security costs that should be allocated to the Cutting Department.
Garfield 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 B? P680,000 P228,235 P570,588 P440,000
Support Department Cost Allocation-Direct Method Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitorial costs are allocated based on machine hours used and the number of trees in each department, respectively. The company estimates that the cutting and pruning areas typically have about 36 and 54 trees, respectively, in them at 1 time. The company also estimates that the cutting process requires about 9 times as many machine hours as the pruning process. The total costs of each department are as follows: Maintenance Department Janitorial Department $7,000 4,000 Cutting Department Pruning Department 52,000 13,000 Using the direct method of support department cost allocation, determine the total cost of each production department after allocating all support costs to the production…
Orange 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 A? P 570,588 P 680,000 P 820,000 P1,141,177
Sequential (Step) Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Human Resources General Factory Direct costs Allocate: General Factory Support Departments Human Resources Human Resources Total after allocation $150,000 1,500 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to six significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Human…
1-Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $500,000 Setup 144,000 Inspection 44,000 Shipping 115,000 Customer Service 84,000 Total $887,000 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer Service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Machine Hours Number of Setups Number of…
Logan Products has two production departments—assembly and finishing. These are supported by two service departments—sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used by DepartmentsSourcing Operations Assembly FinishingSourcing - 20,000 40,000 60,000Operations 10,000 - 60,000 50,000 The costs incurred in the plant are as follows: Departments Departmental CostsSourcing $ 177,000Operations 225,000Assembly 418,000Finishing 263,000Total $ 1,083,000 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method?