Determine the difference in allocation between the two approaches ### (b) Your answer is correct.Compute the overhead rates using the activity-based costing approach. *(Round answers to 2 decimal places, e.g., 15.25.)*#### Overhead Rate Machining $ 69.12 per hour Machine set up $ 184.32 per hour #### eTextbook and MediaAttempts: 1 of 3 used### (c) Your answer is incorrect.Determine the difference in allocation between the two approaches. Family Model Deluxe Model Traditional $ 138240 $ 138240 ABC $ ### Overhead Rate Calculation: Plantwide Approach**Bonita, Inc.** produces two types of gas grills: a family model and a deluxe model. Bonita’s controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. ### Company Operations Information| | **Family Model** | **Deluxe Model** ||------------------------|------------------|------------------|| **Direct labor costs** | $76,800 | $153,600 || **Machine hours** | 2,000 | 2,000 || **Setup hours** | 200 | 800 |Total estimated overhead costs are $460,800. Overhead cost allocated to the machining activity cost pool is $276,480 and $184,320 is allocated to the machine setup activity cost pool.#### (a) **Compute the overhead rate using the traditional (plantwide) approach.****Solution:**The total estimated overhead costs are $460,800 and the combined direct labor costs for both models are $76,800 + $153,600 = $230,400. Using the plantwide approach, we calculate the overhead rate as:\[\text{Overhead rate} = \frac{\text{Total estimated overhead costs}}{\text{Total direct labor costs}}\]\[ \text{Overhead rate} = \frac{460,800}{230,400} = 2 \]Therefore, the overhead rate is **$2**. ### Graphs and Diagrams:- There are no graphs or diagrams in the provided text. **Note:** Please ensure to round answers to 2 decimal places as specified in the instructions (e.g., 15.25).

(b) Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 15.25.) Your answer is correct. (c) Machining Machine set up eTextbook and Media Traditional ABC * Your answer is incorrect. tA tA LA LA Determine the difference in allocation between the two approaches. Difference $ Overhead Rate 69.12 per hour Family Model 184.32 per hour 138240 36864 +A tA EA Deluxe Model 138240 147456 Attempts: 1 of 3 used

(b) Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. 15.25.) Your answer is correct. (c) Machining Machine set up eTextbook and Media Traditional ABC * Your answer is incorrect. tA tA LA LA Determine the difference in allocation between the two approaches. Difference $ Overhead Rate 69.12 per hour Family Model 184.32 per hour 138240 36864 +A tA EA Deluxe Model 138240 147456 Attempts: 1 of 3 used

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 31P: Fisico Company produces exercise bikes. One of its plants produces two versions: a standard model...

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Current Attempt in Progress Concord, Inc. produces two types of gas grills: a family model and a deluxe model. Concord's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations: Direct labor costs Machine hours Setup hours (a) Total estimated overhead costs are $457,200. Overhead cost allocated to the machining activity cost pool is $274,320 and $182,880 is allocated to the machine setup activity cost pool. (b) Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 15.25.) Overhead rate S Your answer is correct. e Textbook and Media Machining (c) Family Model $76,200 2,000 200 Your Answer Correct Answer (Used) Compute the overhead…
Number 4 Smithson, Inc. produces two types of gas grills: a family model and a deluxe model. Smithson's controller has decided to use a plantwide overhead rate based on direct labor costs The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations: Family Model $75,000 2,000 200 Deluxe Model $150,000 2,000 800 Direct labor costs Machine hours Setup hours cton Total estimated overhead costs are $450,000. Overhead cost allocated to the machining activity cost pool is $270,000 and $180,000 is allocated to the machine setup activity cost pool Instructions Compute the overhead rate using the traditional (plantwide) approach. Compute the overhead rates using the activity-based costing approach. Determine the difference in allocation between the two approaches. Smithson, Inc.…
A new product Zico was recently introduced by Philadelphia Co., in order to complement its other products, Novo and Domo. The accountant used to allocate the indirect cost according to the units produced. With the recent addition of an expanded computer system, Sonata would like to investigate the possibility of implementing ABC. Before making a final decision, management has come to you for advice. You collected the following information regarding manufacturing overhead: Table (1) Mfg. Overhead Mfg. Overhead Costs Allocation bases Set-up $ 40,000 Number of set-ups Ordering materials $ 45,000 Number of material orders Handling materials $ 9,000 Number of times material was handled Inspection $ 21,000 Number of inspection hours $115,000 Table (2) Activity Products Zico Novo Domo Total Number of set-ups 5 20 55 Total…
A new product Zico was recently introduced by Philadelphia Co., in order to complement its other products, Novo and Domo. The accountant used to allocate the indirect cost according to the units produced. With the recent addition of an expanded computer system, Sonata would like to investigate the possibility of implementing ABC. Before making a final decision, management has come to you for advice. You collected the following information regarding manufacturing overhead: Table (1) Mfg. Overhead Mfg. Overhead Allocation bases Costs $ 40,000 $ 45,000 $ 9,000 $ 21,000 Number of set-ups Set-up Ordering materials Handling materials Inspection Number of material orders Number of times material was handled Number of inspection hours $115,000 Table (2) Products Activity Zico Novo Domo Total Number of set-ups 5 20 55 Total Number of material orders 1 2 7 Total Number of times material was handled 1 17 Total Number of inspection hours Number of units produced 3 10 6,000 3,000 1,000 Required: 1.…
please answer thr following below Coronado inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed machining machine hours) and machine setup (number of setups). The total estimated machine hours is 3,000, and the total estimated number of setups is 510. Presented below is information related to the company's operations, Direct labor costs Machine hours Number of setups Machining ✓ Your answer is correct. Total estimated overhead costs are $312.000. Overhead cost allocated to the machining activity cost pool is $210,000, and $102.000 is allocated to the machine setup activity cost pool Machine setup S Standard Custom X Your is incorrect Standard $50,000 Compute the overhead rate using the traditional plantwidel approach information related to…
Question 2: Walker Co. designs and builds computer servers for data centers. They use job costing to determine the cost of the systems that they install which consist of server racks. Each system requires a different number of server racks to be installed. Use the forecasts below to determine the total cost of each customer's system. One manager must be hired for every twenty direct labor hours that will be spent on installations in total (round up for fractions), and the advertising expenses are used to run local television advertisements in the hopes of enticing new business. The cost of a typical project is shown below, along with details about several customer orders. Direct Materials $5,000 per server rack Direct Labor $60 per hour $3,000 per person Manager Salary Advertising Expenses $10,000 per month Direct Labor Time 2 hours per server rack Customers Alice Ben Chris Doris Hours Alice Ben Chris Doris Size of System in Racks 10 4 15 20 14 30 (A) What driver should Walker Co. use…
Stan is opening a coffee shop next to Big State University. He knows that controlling his costs will be important to the success of the shop. He will not be able to work all the hours the shop is open, so the employees will need some guidelines to perform their jobs correctly. After talking to an accounting professor, he decides he needs a standard cost system for his shop. Describe the process Stan should follow in setting his standards for materials and labor.
Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units of Simple and 146,100 of Removable, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: Â How much is the overhead allocated to each unit of Simple and Removable?
Use the following information for Brief Exercises 4-34 and 4-35: Sanjay Company manufactures a product in a factory that has two producing departments, Assembly and Painting, and two support departments, S1 and S2. The activity driver for S1 is square footage, and the activity driver for S2 is number of machine hours. The following data pertain to Sanjay: Brief Exercises 4-34 (Appendix 4B) Assigning Support Department Costs by Using the Direct Method Refer to the information for Sanjay Company above. Required: 1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratiosone for Assembly and the other for Painting.) 2. Allocate the support department costs to the producing departments by using the direct method.
Bumblebee Mobiles manufactures a line of cell phones. The management has identified the following overhead costs and related cost drivers for the coming year. The following were incurred in manufacturing two of their cell phones, Bubble and Burst, during the first quarter. REQUIREMENT Review the worksheet called ABC that follows these requirements. You have been asked to determine the cost of each product using an activity-based cost system. Note that the problem information is already entered into the Data Section of the ABC worksheet.
Electan Company produces two types of printers. The company uses ABC, and all activity drivers are duration drivers. Electan Company is considering using DBC and has gathered the following data to help with its decision. A. Activities with duration drivers: B. Activities with consumption ratios and costs: C. Products with cycle time and practical capacity: Required: 1. Using cycle time and practical capacity for each product, calculate the total time for all primary activities. Comment on the relationship to ABC. 2. Calculate the overhead rate that DBC uses to assign costs. Comment on the relationship to a unit-based plantwide overhead rate. 3. Use the overhead rate calculated in Requirement 2 to calculate (a) the overhead cost per unit for each product, and (b) the total overhead assigned to each product. How does this compare to the ABC assignments shown in Part B of the Information set? 4. What if the units actually produced were 10,000 for Printer A and 18,000 for Printer B. Using DBC, calculate the cost of unused capacity.
Fisico Company produces exercise bikes. One of its plants produces two versions: a standard model and a deluxe model. The deluxe model has a wider and sturdier base and a variety of electronic gadgets to help the exerciser monitor heartbeat, calories burned, distance traveled, etc. At the beginning of the year, the following data were prepared for this plant: Additionally, the following overhead activity costs are reported: Required: 1. Calculate the cost per unit for each product using direct labor hours to assign all overhead costs. 2. Calculate activity rates and determine the overhead cost per unit. Compare these costs with those calculated using the unit-based method. Which cost is the most accurate? Explain.