Blue Water Manufacturing Company produces two types of speedboats. Blue Water provides the following data, relevant to allocating its annual overhead cost of $520,000: Blue Water Product Wave Rider Sea Cruiser Units per year 18,000 22,000 Machine hours/unit 4 6 Materials cost/unit $1,800 $2,400 Labor cost/unit $900 $1,100 Determine the overhead allocation rate if the allocation is made based on the cost driver of machine hours.

Blue Water Manufacturing Company produces two types of speedboats. Blue Water provides the following data, relevant to allocating its annual overhead cost of $520,000: Blue Water Product Wave Rider Sea Cruiser Units per year 18,000 22,000 Machine hours/unit 4 6 Materials cost/unit $1,800 $2,400 Labor cost/unit $900 $1,100 Determine the overhead allocation rate if the allocation is made based on the cost driver of machine hours.

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 27E: Plata Company has identified the following overhead activities, costs, and activity drivers for the...

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Ho Cabinet Company has developed the following overhead cost formulas: Overhead Cost Cost Formula Depreciation $600 Lubrication $150 plus $0.70 per machine hour Utilities $0.50 per machine hour Based on these cost formulas, the total overhead cost expected for Ho Cabinet Company if 1,200 machine hours are worked is:
Ole Company manufactures two products, Product A and Product B. Currently, machine hours are used to allocate the overhead costs to the two products. Ole Company is considering adopting an activity-based costing system. If so, overhead costs will be traced to the following activities: Activities Machining Quality Control Material Moves Activity cost pools $300,000 $200,000 $400,000 Cost Drivers Machine Hours Number of inspections Number of moves Product A 30,000 400 2,000 Product B 20,000 600 6,000 (a) Calculate the total overhead cost assigned to Product A under the current system. (b) Calculate the total overhead cost for Product A if the company implements activity-based costing system. (c) Briefly explain which costing method gives a more accurate picture of the costs. (d) Suppose you are the management accountant in a university. List any three (3)activities commonly carried out in universities and identify an appropriate cost driver for each activity.
You make widgets, which is a subassembly for you main product of whatsup. An outside vendor has provided you with a quote to supply the widget part for $ 72.00 per unit Your cost records show the following: Your projected production for the widget is 12,500 units Item of Cost Per Unit Cost Direct Material $18.75 Direct Labor $38.00 Variable manufacturing overhead $9.25 Lease on manufacturing facility $36,000.00 per year Depreciation of equipment $2.50 Allocated Corporate Expenses $1.25 If this offer is accepted, you can sublease the manufacturing facility for $15,000 per year All direct and variable costs can be avoided. The equipment has no salvage value How much would net operating income be changed if the outside supplier offer was accepted? Show all calculations for full credit
Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)
What are the fixed overhead costs of making the component?
Thereon enterprises manufacture one product- a remote-control sailboat. The following unit cost data pertain to the cost unit of a sailboat: Direct material $15.00 Direct labour 22.00 Manufacturing overhead (50% fixed) 17.00 Total manufacturing costs $54.00 Assume that sailboats can be purchased from an outside supplier. What is the relevant cost per unit for this make and buy decision? A. $32 B. $37 C. $39 D. $54
Rundle Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials. Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rundle for $2.60 each. Required a. Calculate the total relevant cost. Should Rundle continue to make the containers? b. Rundle could lease the space it currently uses in the manufacturing process. If leasing would produce $11,600 per month, calculate the total avoidable costs. Should Rundle continue to make the containers? Answer is complete but not entirely correct. $ a. Total relevant cost a. Should Rundle continue to make the containers? b. Total avoidable cost b. Should Rundle continue to make the containers? 190.650,000 Yes $24,180,000 $ 5,200 6,100 4,000 7,800…
What is the unit production cost for each model?
Maching hours Production runs 9,800 20 21,600 16 5,900 28 Requlred: a. Calculate the activity rate for each activity, (Round your answers to 2 decimal places.) Activlty Pool Activity Rate Material Handling Machine Maintenance 37 Setups b. Determine the amount of indirect costs assigned to each of the products. (Do not round your intermediate calculations. Round your answers to 2 declmal places.) Models Cost Econamy Standard Premium
Splish Brothers is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools. Activity Cost Pool Cost Drivers EstimatedOverhead Estimated Use ofCost Driverper Activity Loading and unloading Number of pieces $97,130 88,300 Travel Miles driven 443,250 591,000 Logistics Hours 82,880 2,960 (a) Compute the activity-based overhead rates for each pool. (Round answers to 2 decimal places, e.g. 12.75.) Activity Cost Pool Activity-BasedOverhead Rate Loading and unloading per piece Travel per mile Logistics per hour Please fill in the table.
Aholt Corporation makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Alt Tex How would context to se (1-2 sentenc Direct materials Direct labor $11.30 22.70 Variable manufacturing overhead 1.20 Fixed manufacturing overhead 24.70 Unit product cost $59.90 An outside supplier has offered to sell the company all of these parts it needs for $46.20 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $264,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $21.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be…
A company produces pool pumps. Overhead costs have been identified as follows: Activity Pool Cost Material handling Machine maintenance Setups Cost Driver Number of moves Number of machine hours 14 Number of production runs $ 70,840.00 73,000.00 82,038.00 Total Activity 460 36,500 66 Number of moves Economy 10,080 162 The company makes three models of pumps with the following activity demands: Units produced Standard 21,000 132 Premium 3,545 166 Machine hours 9,550 21,800 5,150 Production runs 17 17 32 Required: a. Calculate the activity rate for each activity. b. Determine the amount of indirect costs assigned to each of the products. Complete this question by entering your answers in the tabs below. Required A Required B Determine the amount of indirect costs assigned to each of the products. Note: Do not round your intermediate calculations. Round your answers to 2 decimal places.