Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There hasbeen a long-simmering dispute between the company's estimator and the work supervisors. The on-site supervisors claim that theestimators do not adequately distinguish between routine work, such as removal of asbestos insulation around heating pipes in olderhomes, and nonroutine work, such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisorsbelieve that nonroutine work is far more expensive than routine work and should bear higher customer charges. The estimator sumsup his position in this way: "My job is to measure the area to be cleared of asbestos. As directed by top management, I simply multiplythe square footage by $3.60 to determine the bid price. Since our average cost is only $2.775 per square foot, that leaves enoughcushion to take care of the additional costs of nonroutine work that shows up. Besides, it is difficult to know what is routine or notroutine until you actually start tearing things apart."To shed light on this controversy, the company initiated an activity-based costing study of all of its costs. Data from the activity-basedcosting system follow:Total ActivityActivity Cost PoolRemoving asbestosEstimating and job setupWorking on nonroutine jobsOther (organization-sustainingcosts and idle capacity costs)Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs androutine jobs require estimating and setup.Activity MeasureThousands of square feetNumber of jobsNumber of nonroutine jobs800 thousand square feet400 jobs100 nonroutine jobsNone Costs for the YearWages and salariesDisposal feesEquipment depreciationOn-site suppliesOffice expenses480,000882,000108,00068,000380,000580,000Licensing and insuranceTotal cost$ 2,498,000Distribution of Resource Consumption Across ActivitiesEstimatingWorking onRemovingand JobNonroutineAsbestosSetupJobsOtherTotalWages and salariesDisposal feesEquipment depreciationOn-site suppliesOffice expenses50%15%20%15%100%70%0%30%0%100%40%5%20%35%100%70%20%10%0%100%15%35%20%30%100%Licensing and insurance30%0%50%20%100%Required:1. Perform the first-stage allocation of costs to the activity cost pools.2. Compute the activity rates for the activity cost pools.3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of thefollowing jobs according to the activity-based costing system.a. A routine 1,000-square-foot asbestos removal job.b. A routine 2,000-square-foot asbestos removal job.c. A nonroutine 2,000-square-foot asbestos removal job.

Activities rates is calculated using the below formula. Activities rates = Activity cost pools /…

Costs for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance 480,000 882,000 108,000 68,000 380,000 580,000 $ Total cost $ 2,498,000 Distribution of Resource Consumption Across Activities Estimating Working on and Job Setup 158 Removing Asbestos Nonroutine Jobs Other Total Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance 50% 20% 15% 100% 70% 0% 30% 0% 100% 40% 20% 35% 100% 70% 20% 10% 0% 100% 15% 35% 20% 30% 100% 30% 0% 50% 20% 100% Required: 1. Perform the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of following jobs according to the activity-based costing system. a. A routine 1,000-square-foot asbestos removal job. b. A routine 2,000-square-foot asbestos removal job. c. A nonroutine 2,000-square-foot asbestos removal job.

Costs for the Year Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance 480,000 882,000 108,000 68,000 380,000 580,000 $ Total cost $ 2,498,000 Distribution of Resource Consumption Across Activities Estimating Working on and Job Setup 158 Removing Asbestos Nonroutine Jobs Other Total Wages and salaries Disposal fees Equipment depreciation On-site supplies Office expenses Licensing and insurance 50% 20% 15% 100% 70% 0% 30% 0% 100% 40% 20% 35% 100% 70% 20% 10% 0% 100% 15% 35% 20% 30% 100% 30% 0% 50% 20% 100% Required: 1. Perform the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of following jobs according to the activity-based costing system. a. A routine 1,000-square-foot asbestos removal job. b. A routine 2,000-square-foot asbestos removal job. c. A nonroutine 2,000-square-foot asbestos removal job.

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

Factory utilities $ 13,500 Direct labor $79,100 12,650 Depreciation on factory equipment Factory manager's salary 8,000 Factory repairs 2,000 Indirect factory labor 48,900 2,640 Administrative office supplies used Indirect materials Sales salaries 48,400 Direct materials used 157,600 Advertising 23,000 How much is the manufacturing overhead in May? 1) $145,850 2) $36,150 3) $155,850 4) $158,490
16,000 Units Direct Materials 12 192,000.00 Direct Labor 8 128,000.00 Variable overheads 2 32,000.00 Supervisor's Salary 6 96,000.00 Depreciation of Special Equipment 4 64,000.00 Allocated General overhead 10 160,000.00 Total Cost 42 672,000.00 An outside supplier has offered to sell 16,000 wheels a year to Toronto Cycles for a price of $38 each, or a total of $608,000 (= 16,000 wheels × $38 each). Special equipment’s used in production was bought 5 years back and do not have any resale value now. The supervisor is specifically hired to supervise the production of wheels, thus is relevant and avoidable if wheels are bought from outside. Requirement: Should the company stop producing the wheels internally and buy them from the outside supplier? Hints and Reference: Lecture and reading material of Buy and Make Decision and Utilization of Constrained
Question 1 San Juan Mineral (SJM) has two service departments and two operating departments Operating data for these departments for last year are as follow Operating Departments Departmental costs Service Departments Maintenance Cafeteria $45.000 $48.000 2,000 1,000 40 30 Mining Processing $70.000 $ 130.000 Machine hours Number of employees 400 360 Costs of the Maintenance Department are allocated on the basis of machine hours. Cafeteria costs are allocated on the basis of number of employees SJM does not distinguish between variable and fixed overhead costs, Assume that 5JM uses the step-down method to allocate service department costs, starting with Maintenance. The total cost allocated from Cafeteria to Processing would be closest to O $22,398 O Cannot be determined from the information given O $19.518 O $23643 O $21.070 O $20,250 O $21,316 11.000 9,000
Problem 5 MOC Construction Company started work on three job sites during the current Data relating to year. Any costs incurred are expected to be recoverable. the three jobs are given below: Site Estimated Costs Contract Cost Billings on Collections on Billings 5,000,000 Price Incurred to Complete Contract 1 3,750,000 5,000,000 7,000,000 5,000,000 900,000 1,000,000 1,000,000 4,000,000 1,000,000 900,000 1,000,000 2 3 2,500,000 1,500,000 If the company records revenue over time, how much must be shown as current asset in the balance sheet of MOC Construction Company as of December 31? 5,500,000 500,000 A. c. 250,000 D. 100,000 в. If the company records revenue at a point in time, how much must be shown as current asset in the balance sheet of MOC Construction Company as of December 31? 5,100,000 500,000 A. C. 250,000 100,000 в. D.
Class work for ACC 420 FBC Question Lotus Ltd has identified the following overhead costs and cost drivers for next year Overhead Items E ( cost) $ 90,000 50,000 Maintenance cost 150,000 30,000 Setups cost Ordering Cost Power Cost Driver Number of setups 400 E( actual transactions) Number of orders 4,000 Machine Hours Kilowatt hours 25,000 75,000 The following is one of the jobs completed during the year Job 700 Job 701 Direct materials $1200 $600 $400 Direct Labor Units completed 250 DLH Number of setups 2 Number of orders 10 Machine hours Kilowatt hours Actual overhead $2500 $1250 $900 100 40 20 1 4 40 50 60 25 The company's practical activity is 9000 DHL
PROBLEMS Note the following information concerning the direct costs of each of the following four departments: 1) Supplied by: HR PM Human Resources $ 975,000 A) B) C) D) Human Resources Plant Maintenance $1,300,000 Plant Maintenance 15% Cutting Polishing $7,685,000 $8,755,000 15% Based on the above information, prepare the following Allocate costs by the direct method. Cutting 50% 45% Polishing 35% 40% Allocate costs by the step-down method (Human Resources first) Allocate costs by the step-down method (Plant Maintenance first) Allocate costs by the reciprocal method
Predetermined Factory Overhead Rate Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be: Disposable supplies $222,000 Depreciation expense 40,000 Utilities 23,300 Nurse salaries 333,400 Technician wages 109,300 Total operating room overhead $728,000 The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs. a. Determine the predetermined operating room overhead rate for the year.$ per…
Direct Materials Used $465,000 Wages to Line Workers 240,000 Office Rent 72,500 Indirect Materials Used 480,000 How much is the total product costs for the year?
22
Please help me
Predetermined Factory Overhead Rate Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be: Disposable supplies $299,600 Depreciation expense 75,000 Utilities 32,000 Nurse salaries 278,500 Technician wages 126,900 Total operating room overhead $812,000 The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs. a. Determine the predetermined operating room overhead rate for the year.
Need help with a practice question from the last unit