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Business

Accounting

administrative

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 1CE: Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and...

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Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and storing goods. Receiving and assembly are necessary activities; expediting and storing goods are unnecessary. The following data pertain to the four activities for the year ending 20x1 (actual price per unit of the activity driver is assumed to be equal to the standard price): Required: 1. Prepare a cost report for the year ending 20x1 that shows value-added costs, non-value-added costs, and total costs for each activity. 2. Explain why expediting products and storing goods are non-value-added activities. 3. What if receiving cost is a step-fixed cost with each step being 1,500 orders whereas assembly cost is a variable cost? What is the implication for reducing the cost of waste for each activity?
The company makes a product with the following costs: Direct materials→₱17.00; Direct labor→₱22.00; Variable manufacturing overhead→₱4.00; Fixed manufacturing overhead→₱504,000.00; Variable selling, general and administrative expenses→₱4.90; Fixed selling, general and administrative expenses→₱319,200. The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 30,000 units per year. The company has invested ₱360,000 in this product and expects a return on investment of 15%. Tax rate is 25%. The markup on absorption cost would be closest to: a. 41.72% b. 15.00% c. 30% d. 43% e. 37.45% f. 45.30%
The company makes a product with the following costs: Direct materials→₱15.70; Direct labor→₱19.70; Variable manufacturing overhead→₱3.50; Fixed manufacturing overhead→₱1,146,600.00; Variable selling, general and administrative expenses→₱2.00; Fixed selling, general and administrative expenses→₱984,900. The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 49,000 units per year. The company has invested ₱340,000 in this product and expects a return on investment of 9%. Absorption cost is 36.5%. Direct labor is a variable cost in this company. The selling price based on the absorption costing approach is closest to: a. ₱84.40 b. ₱85.02 c. ₱53.09 d. ₱115.19
Which of the following would be included in the cost of a product manufactured according to variable costing? a.sales commissions b.direct materials c.interest expense d.office supply costs Another name for variable costing is: a.indirect costing b.process costing c.direct costing d.differential costing If variable manufacturing costs are $15 per unit and total fixed manufacturing costs are $200,000, what is the manufacturing cost per unit if a. 20,000 units are manufactured and the company uses the variable costing concept?
Lillibridge & Friends, Incorporated provides you with the following data for its single product: Sales price per unit Fixed costs (per quarter): Selling, general, and administrative (SG&A) Manufacturing overhead Variable costs (per unit): Direct labor Direct materials Manufacturing overhead SG&A Number of units produced per quarter a. Prime cost per unit b. Contribution margin per unit c. Gross margin per unit d. Conversion cost per unit e. Variable cost per unit Required: Compute the amounts for each of the following assuming that the production levels are within the relevant range if the number of units is 500,000 per quarter. Also calculate if the number of units increases to 600,000 per quarter. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. f. Full absorption cost per unit g. Variable production cost per unit h. Full cost per unit $ 140 1,500,000 4,500,000 $ 17 20 18 14 500,000 units 500,000 units 600,000 units 37.00 $ $ 37.00 55.00 $ 55.00
Jamison Company uses the total cost method of applying the cost-plus approach to product pricing. Jamison produces and sells Product X at a total cost of $1,200 per unit, of which $820 is product cost and $380 is selling and administrative expenses. In addition, the total cost of $1,200 is made up of $680 variable cost and $520 fixed cost. The desired profit is $180 per unit. Determine the markup percentage on total cost.fill in the blank 1 %
Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor costs. Total Costs Products Sales Revenue Traditional АВС Product 540X $ 202,000 $ 59,000 $ 45,900 Product 137Y 172,000 52,000 41,000 Product 2495 84,000 17,000 41,100 X Your answer is incorrect. For each product line, compute operating income using the traditional costing system. Product 540X S 143760 Product 137Y 109610 Product 2495 71900 eTextbook and Media Solution X Your answer is incorrect. For each product line, compute operating income using the activity-based costing system. Product 540X 24 152680 Product 137Y 119410 Product 2495 24 59180 %24 %24
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Cena Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:Units Produced Total Costs80,000 $25,200,00099,000 25,220,000130,000 31,770,000a. Determine the variable cost per unit and the total fixed cost. b. Based on part (A), estimate the total cost for 115,000 units of production.
Kimball Company has developed the following cost formulas: Material usage: Ym = $80X; r = 0.95 Labor usage (direct): Yl = $21X; r = 0.96 Overhead activity: Yo = $358,000 + $100X; r = 0.72 Selling activity: Ys = $46,000 + $14X; r = 0.93 where X = Direct labor hours The company has a policy of producing on demand and keeps very little, if any, finished goods inventory (thus, units produced equals units sold). Each unit uses one direct labor hour for production. The president of Kimball Company has recently implemented a policy that any special orders will be accepted if they cover the costs that the orders cause. This policy was implemented because Kimball's industry is in a recession and the company is producing well below capacity (and expects to continue doing so for the coming year). The president is willing to accept orders that minimally cover their variable costs so that the company can keep its employees and avoid layoffs. Also, any orders above variable costs will increase…
Jamison Company uses the total cost method of applying the cost-plus approach to product pricing. Jamison produces and sells Product X at a total cost of $800 per unit, of which $540 is product cost and $260 is selling and administrative expenses. In addition, the total cost of $800 is made up of $460 variable cost and $340 fixed cost. The desired profit is $168 per unit. Determine the markup percentage on total cost. %
The graphs below represent cost behavior patterns that might occur in acompany's cost structure. The vertical axis represents total cost, and thehorizontal axis represents activity output. Required:For each of the following situations, choose the graph from the group a-1 that best illustrates the cost pattern involved. Also, for each situation,identify the driver that measures activity output. 1. The cost of power when a fixed fee of $500 per month is chargedplus an additional charge of $0.12 per kilowatt-hour used2. Commissions paid to sales representatives. Commissions arepaid at the rate of 5 percent of sales made up to total annual salesof $500,000, and 7 percent of sales above $500,000.3. A part purchased from an outside supplier costs $12 per part for the first 3,000 parts and $10 per part for all parts purchased inexcess of 3,000 units.4. The cost of surgical gloves, which are purchased in incrementsof 100 units (gloves come in boxes of 100 pairs).5. The cost of tuition at a…