Vaughn Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The followinginformation relates to its budgeted operations for the current year.RevenuesDirect materials costsDirect labor costs.Overhead costsOperating income (loss)RevenuesDirect materials costsDirect labor costs.Overhead costsOperating income (loss)Activity Cost PoolsScheduling and travelSetup timeSupervisionThe controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not moreprofitable given that the installations of window coverings are less complex for residential customers. In addition, the residential clientbase resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers.As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a moreaccurate product costing model can be developed. Here are the three activity cost pools and related information she developed:Scheduling and travel.Setup timeActivity Cost PoolsScheduling and travelSetup timeSupervisionDirect labor costVaughn Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The followinginformation relates to its budgeted operations for the current year.Scheduling and travelSetup timeSupervision.Scheduling and travelSetup time$35.000120,00087,500Setup timeEstimated Overhead$87,500112,500120,000SupervisionCommercial$35,000Commercial120,00087,500$Estimated Use of Cost Drivers per ProductResidential $Scheduling and travel $$Commercial$$342,500The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more.profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential clientbase resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers.As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a moreaccurate product costing model can be developed. Here are the three activity cost pools and related information she developed:Estimated OverheadCommercial242,500$100,000$$750500$342,500242,500$100,000$87,500112,500120,000500Estimated Use of Cost Drivers per ProductCommercial750$50,000280,000232,500Cost DriversHours of travelNumber of setupsCompute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.)$50,000280,000232,500ResidentialCost DriversDirect labor costResidential500250Hours of travelNumber of setupsOverhead Rates$500,500Residential500$(62,000)Residential250562,500Overhead RatesCompute the activity-based overhead rates for each of the three cost pools. (Round answers to 2 decimal places, e.g. 0.38.)Operating income (loss)$500,500562,500$(62,000)per hourper setupper dollarCompute the operating income for each product line, using the activity-based overhead rates.per hourper setupper dollar

Activity-based costing helps in allocating the overhead cost among the products. Activity rates are…

Answered: Compute the activity-based overhead…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Meester Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Equipment expense Supervisory expense Distribution of Resource Consumption Across Activity Cost Pools: Equipment expense Supervisory expense $80, 400 $ 4, 100 Product MO Product H2 Total Activity Cost Pools Machining Order Filling 0.60 0.60 MHS (Machining) 1,300 9,540 10,840 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: 0.20 0.10 Orders (Order Filling) 790 1,480 2,270 Other 0.20 0.30…
Do not give image format
White Company has two departments, Cutting and Finishing. The company uses job-order costing and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Direct labor-hours Machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Cutting 7,800 59,500 $360,000 $ 3.00 0 Finishing 83,000 3,800 $ 418,000 0 $3.75
Ramsey SARL uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs - Security expense and Building depreciation - are allocated to three activity cost pools - Shipping, Carving, and Other - based on resource consumption. Data to perform these allocations appear below: Overhead Costs: Security expense: $105,000 Building depreciation: $70,000 Distribution of Resource Consumption across Activity Cost Pools: Overhead Cost Activity Cost Pools Shipping Carving Other Security expense 0.30 0.42 0.28 Building depreciation 0.34 0.32 0.34 The second stage of allocation is done by assigning the Shipping costs to products on the basis of orders shipped while products are assigned Carving costs based on machine hours. Costs assigned to the Other activity pool are not further assigned to products. Activity information for Ramsey's only two products is below: orders shipped machine hours Product BA-15: 6,300 1,500…
XYZ Co has an activity-based costing system with three activity cost pools--Fixing, Cutting, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and factory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Factory depreciation $79,600 Indirect labor $5,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Fixing Cutting Other Equipment depreciation 0.50 0.30 0.20 Factory expense 0.50 0.30 0.20 Fixing costs are assigned to products using machine-hours (MHs) and Cutting 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: Machine-hours (Fixing) Orders (Cutting) Product A 1,550 1,070 Product B 9,700 1,630 The activity rate for the Fixing activity cost pool under…
Forner, Inc., 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 Estimated Expected Activity Activity Overhead Activity Cost Pools Labor-related Measures Cost Product Z1 Product Z8 Total DLHS $112,190 40,440 609,770 600 2,000 Machine setups Оrder size 2,600 1,200 6, 200 setups 500 700 MHs 3,000 3,200 $762,400 The activity rate for the Machine Setups activity cost pool under activity-based costing is closest to: Multiple Cholce $203.26 per setup $190.55 per setup $122.97 per setup 92 F AQI 61 nere to search DELL
Please show your work.
Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Home Work $ 40 17 $ 66 Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per nonth 32 363 574 620 units 330 units Harbour has monthly overhead of $186,075, which is divided into the following cost pools: $ 91,300 53,975 40,800 Setup costs Quality control Maintenance Total $186,075 The company has also compiled the following information about the chosen cost drivers: Work Total Home 38 Number of setups Number of inspections Number of machine hours 1,600 72 110 330 305 635 1,800 3,400 Required: 1. Suppose Harbour uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) Overhead Assigned Home Model: Work Model: Total Overhead Cost 2. Calculate…
Sabby Industries has three activity cost pools and two products. It expects to produce 2,900 units of Product S209 and 1.200 of Product NZ16. Having identified its activity cost pools and the cost drivers for each pool, Sabby accumulated the following data relative to those activity cost pools and cost drivers. Activity Cost Pool Machine set-ups Assembling Inspection (a) Cost Driver Assembling Set-ups Machine hours Calculate the overhead rates. Inspection Inspections Machine set-ups $ $ Estimated Overhead $78,660 323,000 6,400 Estimated Use of Cost Drivers per set-up 190 per inspection 17,000 100 per machine hour 5709 NZ16 130 10,100 60 60 6,900 40
Comparing ABC and Plantwide Overhead Cost Assignments Wellington Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs: Setting up equipment $782,000 Other overheard $4,352,000 Setting up equipment is based on setup hours, and other overhead is based on oven hours. Wellington produces two products, Fudge and Cookies. Information on each product is as follows: Fudge Cookies Units produced 8,000 445,000 Setup hours 13,600 3,400 Oven hours 3,400 23,800 Required: Round your answers to the nearest whole dollar, unless otherwise directed. 1. Calculate the activity rate for (a) setting up equipment and (b) other overhead. a. Setting up equipment $4 per setup hour b. Other overhead per oven hour 2. How much total overhead is assigned to Fudge using ABC? $4
A company adopts activity-based costing system. Activity Material handling Quality inspection Machine checkups Required: Req 1 Complete this question by entering your answers in the tabs below. Cost Driver Number of moves Number of inspections machine hours Req 2 and 3 Material Handling Quality inspection Machine checkup Calculate the activity rates. Note: Round your answers to 2 decimal places. Activity Rate Estimated MOH for activity $ 2,400.00 $ 8,636.00 $ 16,629.00 per Material Move per Inspection per Machine Hour Product A 41 moves 570 inspections 3,020 machine hours. Product B 55 moves 700 inspections 4,210 machine hours.
Single Plantwide Factory Overhead Rate Scrumptious Snacks Inc. manufactures three types of snack foods: tortilla chips, potato chips, and pretzels. The company has budgeted the following costs for the upcoming period: Factory depreciation Indirect labor Factory electricity Indirect materials Selling expenses Tortilla chips Potato chips Pretzels Administrative expenses Total costs Factory overhead is allocated to the three products on the basis of processing hours. The products had the following production budget and processing hours per case: I Budgeted Volume (Cases) Total If required $20,857 51,690 5,894 3,300 2,400 5,700 11,400 12,243 29,019 16,323 $136,026 Processing Hours Per Case 0.10 0.15 0.12

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS