Bunker makes two types of briefcases, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case 15,000 551 56 Leather Case 10,000 899 84 Total estimated overhead costs are $223,250, of which $181,250 is assigned to the materials handling pool and $42,000 is assigned to the setup pool. Required: 1. Calculate the overhead assigned to the leather case line using the traditional costing system based on labor hours. 2. Calculate the overhead assigned to the leather case line using ABC. 3. Was the leather case over- or undercosted by the traditional cost system compared to ABC?
Q: Building: 40-year estimated useful life, $72,000 residual value, $2,400,000 cost Equipment: 12-year…
A: Since you have posted multiple question , we will do the first one for you . In order to get…
Q: Assume FICA tax rate of 6.2% on the first $132,900 in wages, plus 1.45% Medicare tax on all…
A: Net pay is the sum of money that an employee receives in hand. It is determined after subtracting…
Q: Taft Corporation had after-tax income from continuing operations of $16.1 million for the year. Taft…
A: The earnings per share ratio is the financial ratio that calculates the earnings available on each…
Q: Grace Corp. had 100,000 common shares outstanding as of January 1, and declared a 1-for-2 reverse…
A: A company's net income less preferred dividends is its earnings per share (EPS), which is then…
Q: Required Information [The following information applies to the questions displayed below.] Movelt…
A: Debit Cash (or Accounts Receivable) $27,000This entry represents the cash received from the sale of…
Q: The entity reports the following transactions for the 2022 tax year. The trustee accumulates all…
A: To solve this problem, we need to calculate the income tax liability for the entity based on the…
Q: Sagar
A: The objective of this question is to calculate the various variances related to direct material and…
Q: During the next four months, a customer requires, respectively, 600, 800, 1200, and 900 units of a…
A: InventoryInventory is the material available with the company for the process of production and…
Q: Only typed solution
A: The objective of the question is to prepare a schedule of expected cash collections from sales for…
Q: CableTech Bell Corporation (CTB) operates in the telecommunications industry. CTB has two divisions:…
A: CostingThe process of determining the cost of the product from all the expenses incurred is called…
Q: 11. The three stages of data processing are: A) inputs, outputs, and processing. B) source…
A: Data processing:It is the procedure for compiling and modifying digital data to produce informative…
Q: Assume Nordstrom prepares budgets quarterly. The following information is available for use in…
A: The objective of this question is to prepare a cash budget for each month of the second quarter…
Q: Required Information [The following information applies to the questions displayed below.] BMX…
A: Payroll Accounting is the accounting for the total earnings of the employees, total tax deductions,…
Q: Question 3 ✓ Saved Taylor's home had some flooding after her sump pump failed. She suffered a…
A: The treatment of casualty losses is a critical consideration for individuals who experience…
Q: Monica is a manufacturer of handcrafted wooden signs. The variable cost of each wooden sign Monica…
A: To find the markup percentage of the wholesaler, we need to first find the wholesaler's price for…
Q: None
A: Variances is the amount of difference between the actual values and the values estimated by the…
Q: Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care…
A: The objective of the question is to calculate the net present value (NPV) of the investment in the…
Q: Miguez Corporation makes a product with the following standard costs: Direct materials Direct labor…
A: Hello student! Variable Overhead Rate Variance shows us the difference between the actual overhead…
Q: 1. Without making journal entries, compute the carrying amount of the bonds payable at July 31,…
A: Bond retirement means paying off the bond obligations to the investors. The bond requirement may…
Q: 1. The following summary data are from a performance report for Smudge Company for August, during…
A: In a flexible budget, the actual production/sales activity level is taken into account when…
Q: am. 114.
A: References:Phillips, J. J. (1998). The return-on-investment (ROI) process: Issues and trends.…
Q: The following aging information pertains to ABC Company's accounts receivable at December 31, 2024:…
A: The allowance for doubtful accounts is created to record the estimated bad debt expense for the…
Q: Your firm is contemplating the purchase of a new $370,000 computer-based order entry system. The…
A: Net present value (NPV) is the difference between the present value of cash inflows and the present…
Q: The following information applies to the questions displayed below.] On December 31, Jarden…
A: Step 1:To prepare the adjusting entry to record bad debts expense at December 31, we need to…
Q: None
A: The debit entry to "Bad Debt Expense" during the recording process signifies the identification of a…
Q: Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2023, she sells the…
A: The taxable income includes the income from all sources. The tax rates are applicable are based on…
Q: Inventory Valuation under Absorption Costing and Variable Costing At the end of the first year of…
A: The objective of this question is to calculate the cost of the finished goods inventory under two…
Q: In accounting, how does Big Data Analytics contribute to transforming financial reporting and…
A: Financial Reporting-Financial reporting is the process of producing financial statements that…
Q: Swifty Company makes various electronic products. The company is divided into a number of autonomous…
A: The objective of the question is to determine the minimum transfer price that the Chip Division…
Q: QUESTION 25 In the process of reconciling its bank statement for January, Maxi's Clothing's…
A: Bank reconciliation statement :— It is the statement that shows the reconciliation of balance as per…
Q: Larry Teng works for a company that uses a percentage method to compute the federal income tax…
A: Answer:- Income tax:- The amount that a taxpayer must pay to the national tax authorities on top of…
Q: E20.17B (LO 3,4) (Accounting for an Operating Lease) On January 1, 2025, Fairfield Co. leased a…
A: Operating leases can lessen the hazards of asset ownership, including obsolescence, depreciation,…
Q: eginning inventory, purchases, and sales data for DVD players are as follows: Nov. 1 Inventory 10…
A: Lets understand the basics.Cost of goods sold and ending inventory can be calculated using,(1)…
Q: The Lompoc Corporation is authorized to issue 690,000 shares of $7 par-value common stock and…
A: January 1: Issuance of Common StockGiven:Issued 29,000 shares of common stock at $27 per share.$7…
Q: Problem 9-21 (Algo) (LO 9-6) The partnership agreement of Jones, King, and Lane provides for the…
A: Step 1: Bonus Bonus to Jones = 15% x $42,000Bonus to Jones = $6,300 Step 2: Interest Jones = 11% x…
Q: Hamlet House makes portable garden sheds that sell for $1,800 each. Costs are as follows: Per…
A: The objective of the question is to calculate the break-even point and the number of units to be…
Q: Consider the following two interest options for an investment of $2000: (A) 6% simple interest. (B)…
A: Step 1: Calculate the future value of the investment for option A (simple interest).Future value of…
Q: Required information [The following information applies to the questions displayed below] In 2023,…
A: The adjusted gross income of a taxpayer is the net income after deducting certain allowable…
Q: A stock which is sold at its face value of $3,000 is expected to pay a dividend of $120 for the next…
A: Risk premium refers to the extra return an investor demands for taking on additional risk when…
Q: counting and Finance 1. ent Name: Xing Yu chen (1194897) Please show all of your work, so that…
A: The objective of the question is to calculate the pension expense for the year for VPro Inc. based…
Q: None
A: Step 1:Answer a.Computation of the break-even point in units:Break-even point in units = Total fixed…
Q: None
A: Step 1: Determine Variable Cost per Cone and Fixed CostsVariable Cost per Cone: $0.375Fixed Costs:…
Q: Please do not give solution in image format thanku
A: Trend percent analysis is a useful technique that is used to compare the financial performance of a…
Q: Problem 9-16 (Algo) (LO 9-9) Following are the capital account balances and profit and loss…
A: Investment is prescribed as the assets that are held by an enterprise to earn income or wealth in…
Q: 1. What amount(s) if any, related to the situations described should Rushing report among current…
A: Long-term liabilities -Business debts that are not expected to be paid off in the next 12 months are…
Q: None
A: Before the Change in Capital StructureInterest Expense:Interest expense = Debt x Interest rate =…
Q: Roll Board Inc. manufactures several models of high-quality skateboards. The company's ABC system…
A: The objective of the question is to calculate the customer margin on sales to SkateCo for the year.…
Q: None
A: Potato Pet Project Analysis:a. Payback Period:Calculate annual cash flow:Sales: $865,000Variable…
Q: None
A: Step 1:Computation of the net cash inflows (outflows) from financing activities: ($ in millions)Cash…
Q: In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa…
A: The percentage of completion method is used to recognize the revenue and profit or loss based on the…
hsl.7
Step by step
Solved in 2 steps
- Evans, Inc., has a unit-based costing system. Evanss Miami plant produces 10 different electronic products. The demand for each product is about the same. Although they differ in complexity, each product uses about the same labor time and materials. The plant has used direct labor hours for years to assign overhead to products. To help design engineers understand the assumed cost relationships, the Cost Accounting Department developed the following cost equation. (The equation describes the relationship between total manufacturing costs and direct labor hours; the equation is supported by a coefficient of determination of 60 percent.) Y=5,000,000+30X,whereX=directlaborhours The variable rate of 30 is broken down as follows: Because of competitive pressures, product engineering was given the charge to redesign products to reduce the total cost of manufacturing. Using the above cost relationships, product engineering adopted the strategy of redesigning to reduce direct labor content. As each design was completed, an engineering change order was cut, triggering a series of events such as design approval, vendor selection, bill of materials update, redrawing of schematic, test runs, changes in setup procedures, development of new inspection procedures, and so on. After one year of design changes, the normal volume of direct labor was reduced from 250,000 hours to 200,000 hours, with the same number of products being produced. Although each product differs in its labor content, the redesign efforts reduced the labor content for all products. On average, the labor content per unit of product dropped from 1.25 hours per unit to one hour per unit. Fixed overhead, however, increased from 5,000,000 to 6,600,000 per year. Suppose that a consultant was hired to explain the increase in fixed overhead costs. The consultants study revealed that the 30 per hour rate captured the unit-level variable costs; however, the cost behavior of other activities was quite different. For example, setting up equipment is a step-fixed cost, where each step is 2,000 setup hours, costing 90,000. The study also revealed that the cost of receiving goods is a function of the number of different components. This activity has a variable cost of 2,000 per component type and a fixed cost that follows a step-cost pattern. The step is defined by 20 components with a cost of 50,000 per step. Assume also that the consultant indicated that the design adopted by the engineers increased the demand for setups from 20,000 setup hours to 40,000 setup hours and the number of different components from 100 to 250. The demand for other non-unit-level activities remained unchanged. The consultant also recommended that management take a look at a rejected design for its products. This rejected design increased direct labor content from 250,000 hours to 260,000 hours, decreased the demand for setups from 20,000 hours to 10,000 hours, and decreased the demand for purchasing from 100 component types to 75 component types, while the demand for all other activities remained unchanged. Required: 1. Using normal volume, compute the manufacturing cost per labor hour before the year of design changes. What is the cost per unit of an average product? 2. Using normal volume after the one year of design changes, compute the manufacturing cost per hour. What is the cost per unit of an average product? 3. Before considering the consultants study, what do you think is the most likely explanation for the failure of the design changes to reduce manufacturing costs? Now use the information from the consultants study to explain the increase in the average cost per unit of product. What changes would you suggest to improve Evanss efforts to reduce costs? 4. Explain why the consultant recommended a second look at a rejected design. Provide computational support. What does this tell you about the strategic importance of cost management?Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC: What would be the predetermined rate for each cost pool?Larsen, Inc., produces two types of electronic parts and has provided the following data: There are four activities: machining, setting up, testing, and purchasing. Required: 1. Calculate the activity consumption ratios for each product. 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). When compared with the activity ratios, what can you say about the relative accuracy of a plantwide rate? Which product is undercosted? 3. What if the machine hours were used for the plantwide rate? Would this remove the cost distortion of a plantwide rate?
- 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.Medical Tape makes two products: Generic and Label. It estimates it will produce 423,694 units of Generic and 652,200 of Label, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: How much is the overhead allocated to each unit of Generic and Label?Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data were compiled by the accountants before making any allocations: The total cost of purchasing and receiving parts used in manufacturing is 60,000. The company uses a job-costing system with a single indirect cost rate. Under this system, allocated costs were 48,000 and 12,000 for X and Y, respectively. If an activity-based system is used, what would be the allocated costs for each product?
- The management of Wheeler Company has decided to develop cost formulas for its major overhead activities. Wheeler uses a highly automated manufacturing process, and power costs are a significant manufacturing cost. Cost analysts have decided that power costs are mixed; thus, they must be broken into their fixed and variable elements so that the cost behavior of the power usage activity can be properly described. Machine hours have been selected as the activity driver for power costs. The following data for the past eight quarters have been collected: Required: 1. Prepare a scattergraph by plotting power costs against machine hours. Does the scatter-graph show a linear relationship between machine hours and power cost? 2. Using the high and low points, compute a power cost formula. 3. Use the method of least squares to compute a power cost formula. Evaluate the coefficient of determination. 4. Rerun the regression and drop the point (20,000; 26,000) as an outlier. Compare the results from this regression to those for the regression in Requirement 3. Which is better?Big Mikes, a large hardware store, has gathered data on its overhead activities and associated costs for the past 10 months. Nizam Sanjay, a member of the controllers department, believes that overhead activities and costs should be classified into groups that have the same driver. He has decided that unloading incoming goods, counting goods, and inspecting goods can be grouped together as a more general receiving activity, since these three activities are all driven by the number of receiving orders. The 10 months of data shown below have been gathered for the receiving activity. Required: 1. Prepare a scattergraph, plotting the receiving costs against the number of purchase orders. Use the vertical axis for costs and the horizontal axis for orders. 2. Select two points that make the best fit, and compute a cost formula for receiving costs. 3. Using the high-low method, prepare a cost formula for the receiving activity. 4. Using the method of least squares, prepare a cost formula for the receiving activity. What is the coefficient of determination?Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Overhead costs: Required: 1. Calculate the four activity rates. 2. Calculate the unit costs using activity rates. Also, calculate the overhead cost per unit. 3. What if consumption ratios instead of activity rates were used to assign costs instead of activity rates? Show the cost assignment for the inspection activity.
- Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: aCalculated using number of dies as the single unit-level driver. bCalculated by multiplying the consumption ratio of each product by the cost of each activity. Required: 1. Using the five most expensive activities, calculate the overhead cost assigned to each product. Assume that the costs of the other activities are assigned in proportion to the cost of the five activities. 2. Calculate the error relative to the fully specified ABC product cost and comment on the outcome. 3. What if activities 1, 2, 5, and 8 each had a cost of 650,000 and the remaining activities had a cost of 50,000? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Comment on the implications for the approximately relevant approach.The controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with materials handling costs. The high and low levels of resource usage occurred in September and March for three different resources associated with materials handling. The number of moves is the driver. The total costs of the three resources and the activity output, as measured by moves for the two different levels, are presented as follows: Required: 1. Determine the cost behavior formula of each resource. Use the high-low method to assess the fixed and variable components. 2. Using your knowledge of cost behavior, predict the cost of each item for an activity output level of 9,000 moves. 3. Construct a cost formula that can be used to predict the total cost of the three resources combined. Using this formula, predict the total materials handling cost if activity output is 9,000 moves. In general, when can cost formulas be combined to form a single cost formula?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.