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 Table:**| Products | Sales Revenue | Traditional | ABC ||---------------|---------------|-------------|-------|| Product 540X | $208,000 | $54,000 | $49,000 || Product 137Y | $155,000 | $48,000 | $30,000 || Product 249S | $92,000 | $23,000 | $46,000 |The table compares the sales revenue and costs of three products (540X, 137Y, and 249S) using two different costing systems: traditional and activity-based costing (ABC). - **Product 540X**: - Sales Revenue: $208,000 - Traditional Cost: $54,000 - ABC Cost: $49,000- **Product 137Y**: - Sales Revenue: $155,000 - Traditional Cost: $48,000 - ABC Cost: $30,000- **Product 249S**: - Sales Revenue: $92,000 - Traditional Cost: $23,000 - ABC Cost: $46,000This analysis helps in understanding how different costing methods allocate costs and can impact financial decision-making within a company. For each product line, compute operating income using the activity-based costing system.- Product 540X: $____- Product 137Y: $____- Product 249S: $____This exercise involves calculating operating income for three different product lines using the activity-based costing (ABC) system. ABC is a method that assigns overhead and indirect costs to related products and services, leveraging activities as cost drivers. The aim is to provide a more accurate cost allocation by identifying all of the activities that an organization undertakes and assigning costs to products based on their use of those activities.

Activity-based costing is used to allocate overhead expenses on the basis of activity. Other than…

Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and ar activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor costs. Products Product 540X Product 137Y Product 249S Sales Revenue $208,000 155,000 92,000 Total Costs Traditional $54,000 48,000 23,000 ABC $49,000 30,000 46,000

Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and ar activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor costs. Products Product 540X Product 137Y Product 249S Sales Revenue $208,000 155,000 92,000 Total Costs Traditional $54,000 48,000 23,000 ABC $49,000 30,000 46,000

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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Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining. Order Filing, and Other-based on resource consumption, Data to perform these allocations appear below: Overhead costs: Equipment depreciation Supervisory expense $ 30,000 $ 14,800 Distribution of Resource Consumption Across Activity Cost Pools: Equipment depreciation Supervisory expense Activity: Product W1 Product Me Total Machining Order Filling 0.50 0.50 In the second stage, Machining costs are assigned to products using machine-hours (Ms) and Order Filing costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Product W1 Product Me Total Activity Cost Pools MHS (Machining) 5,530 17,000 22,530 0.40 0.30 Show Transcribed Text 5,530 17,000 22,530 Orders (Order Filling)…
Olmo, Incorporated, manufactures and sells two products: Product KO and Product H9. The annual production and sales of Product of KO is 900 units and of Product H9 is 900 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost Pools Labor-related Production orders: Order size Activity Measures DLHS orders MHS Estimated Overhead Cost $ 550, 208 53, 219 835,816 $ 1,439, 243 Expected Activity Product Ke Product H 5,400 1,000 3,100 2,700 600 4,000 Total 8,100 1,690 7,100 The overhead applied to each unit of Product H9 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)
Jennifer Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: Estimated Expected Activity Overhead Activity Cost Pools Product design Assembling Supporting customers Cost Product A Product B 400 Total $23,500 $18,000 $34,600 100 200 300 500 500 600 700 900 The activity rate under the activity-based costing sysam for Supporting customers is closest to: Multiple Cholce $36.24 $84.56 S115.33 Prev 1 of 10 Next > 2:0 92 F AQI 61 9/9 Type here to search DELL
Vitex, Incorporated manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) Direct materials 2.20 pounds $ 16.30 per pound $ 35.86 Direct labor 1.00 hours $ 15.80 per hour $ 15.80 Variable manufacturing overhead 1.00 hours $ 9.50 per hour $ 9.50 Total standard cost per unit $ 61.16 Total Variances Reported Standard Cost* Price or Rate Quantity or Efficiency Direct materials $ 681,340 $ 12,702 F $ 32,600 U Direct labor $ 300,200 $ 4,000 U $ 15,800 U Variable manufacturing overhead $ 180,500 $ 4,100 F $ ?† U *Applied to Work in Process during the period. The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be…
Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $24.82 per unit, while product B has been assigned $13.58 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Activity Costs Cost Drivers Activity Driver Consumption Machine setup $ 158,000 Setup hours 2,000 Materials handling 112,000 Pounds of materials 16,000 Electric power 25,000 Kilowatt-hours 25,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: A B Number of units produced 5,000 10,000 Direct materials cost $ 32,000 $ 41,000 Direct labor cost $ 41,000 $ 38,000 Number of setup hours 100 200 Pounds of materials used 1,000 1,000 Kilowatt-hours 2,000 4,000 Required: 1. Use…
XYZ Co. currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow. Product Pool No.1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) Beta 1,200 45 2,250 Zeta 2,800 55 750 Pool Cost $160,000 $280,000 $360,000 The overhead cost allocated to Zeta by using activity-based costing procedures would be: O a. $444,000. Ob. None of the given answers. O c. $472,000. Od. $356,000. O e. $328.000.
Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Lion Corporation uses an activity-based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation Supervisory expense Equipment depreciation Distribution of Resource Consumption Across Activity Cost Pools: Product C9 $ 47,000 Product UO $ 6,000 Total Supervisory expense 0.60 Activity Cost Pools O $18.00 per MH O $5.30 per MH O $2.82 per MH O $3.18 per MH Mac 0.60 In the second stage, Machining costs are assigned to products using machine- hours (MHS) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: 6,900 Order Filling 3,100 0.10 MHS (Machining) 10,000 b.20 200…
FDC-11063 Incorporated, manufactures and sells two products: Product Z1 and Product Z8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost Pools Activity Measures Labor-related DLHS Estimated Overhead Cost $ 145,000 Expected Activity Product Z1 Product Z8 Total 4,000 2,000 6,000 Machine setups Order size setups MHS 68,360 1,069,190 1,100 300 1,400 2,700 3,100 5,800 $ 1,282,550 The activity rate for the Order Size activity cost pool under activity-based costing is closest to: Multiple Choice О $98.53 per MH О $257.34 per MH $184.34 per MH $196.13 per MH
The XYZ Company uses Standard costing system. Following data are taken from its cost record.STANDARD ACTUALDirect Material Rate per unit Rs. 10 Rate per unit Rs. 12Total Cost Rs. 80,000 Quantity 8,600 unitsDirect Labour Wages per hour Rs. 40 Wages per hour Rs. 30Total labour hours 600 Total labour cost Rs. 16,500Factory Overhead 90% of Direct labour Rs. 20,000Required:1] Compute the Following. a) Material Price Varianceb) Material Quantity Variance c) Labour Rate Varianced) Labour efficiency variance e) Overhead Variance
Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation $ 47,000 Supervisory expense $ 6,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.60 0.10 0.30 Supervisory expense 0.60 0.20 0.20 In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: Activity: MHs (Machining) Orders (Order Filling) Product C9 6,900 200…
XYZ Co. currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow Pool No. 3 (Driver: PC) Pool No. 2 (Driver: SU) Pool No.1 (Driver: Product DLH) 2,250 55 1,200 Zeta 750 45 2,800 Beta $360,000 $280,000 $160,000 Pool Cost :The overhead cost allocated to Beta by using activity-based costing procedures would be $356,000 a O $472,000 b O $328,000 .c O $444,000 d O None of the given answers e O