Drilling Company uses activity-based costing and provides this information:DriverRate$0.8052.002.9031.00Manufacturing ActivityMaterials handlingMachineryAssemblyInspectionCost DriverNumber of partsNumber of machine hoursNumber of partsNumber of finished unitsDrilling has just completed 81 units of a component for a customer. Each unit required 101 parts and 3.05 machine hours. The primecost is $1,310 per finished unit. All other manufacturing costs are classified as manufacturing overhead.Required:1. Compute the total manufacturing costs and the unit costs of the 81 units just completed using ABC costing.2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research anddevelopment and product design, is $181 per unit. The total cost of downstream activities, such as distribution, marketing, andcustomer service, is $301 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstreamactivities. Also compute the relative proportion of each main cost category.

Activity Based Costing: Overhead and indirect costs are divided across related goods and services…

Answered: Drilling Company uses activity-based…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Luther Manufacturing uses an activity-based cost system. The company produces Model 0 and Model J. Information relating to the two products is as follows: Model O Model J 48,000 60,000 Units produced Machine hours 15,000 17,000 Direct labor hours 16,000 24,000 Material handling (number of moves) 8,000 12,000 Setups 10,000 14,000 Th+following costs are reported: Material handling $160,000 Labor-related overhead 480,000 Setups 240,000 Labor-related overhead costs assigned to Model O are (E) a. $240,000 C. $217,000 b. $232,000 d. $192,000
Integrity Company uses standard costing for each specialized product. The following information is available: Standards: Material 3.0 feet per unit @ 42.00 per foot Labor 2.5 hours per unit @ 75.00 per hour Actual: Production 2,750 units produced during the month Material 8,700 feet used; 9,000 feet purchased @ 45.00 per foot Labor 7,000 direct labor hours @ 79.00 per hour How much is the amount of direct materials debited to Work in Process Inventory? A. 391,500 B. 405,000 C. 365,400 D. 346,500
Craft Company reports the following partial activity-based costing information for its Deluxe model. Complete the table by entering amounts for the missing items. Note: Round "Overhead per unit" to 2 decimal places. Activity Assembly Factory services Setup Total allocated cost Units produced Overhead cost per unit Activity Usage 3,000 direct labor hours 2,800 square feet setups $ $ Activity Rate 10 per direct labor hour per square foot 180 per setup Allocated Cost 28,000 4,500 2,500
Drilling Company uses activity-based costing and provides this information: Manufacturing Activity Cost Driver Driver Rate Materials handling Number of parts $ 0.60 Machinery Number of machine hours 51.00 Assembly Number of parts 2.85 Inspection Number of finished units 30.00 Drilling has just completed 80 units of a component for a customer. Each unit required 100 parts and 3 machine hours. The prime cost is $1,300 per finished unit. All other manufacturing costs are classified as manufacturing overhead. Required: 1. Compute the total manufacturing costs and the unit costs of the 80 units just completed using ABC costing. 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $180 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $300 per unit. Compute the full product cost per unit, including…
O&G Company manufactures console tables and uses an activity-based costing system to allocate all manufacturing conversion costs. Each console table consists of 40 separate parts totaling $250 in direct materials and requires 5.0 hours of machine time to produce. Additional information follows: Activity Materials handling Allocation Base Number of parts Machine hours Number of parts Number of finished units Machining Assembling Packaging What is the number of finished console tables? OA 200 OB. 467 OC. 25 OD. Cannot be determined from the information given Cost Allocation Rate $3.00 per part $4.80 per machine hour $1.00 per part $4.00 per finished unit
Requlred Informatlon Greenwood Company manufactures two products-13,000 units of Product Y and 5,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z: Activity Cost Pool Machining Machine setups Production design General factory Activity Measure, Machine-hours Number of setups Number of products Direct labor-hours Estimated Overhead Cost $ 242,400 $ 114,400 86,000 $ 302,400 Expected Activity 12,000 MHs 220 setups 2 products 12,000 DLHS Activity Measure Machining Number of setups Number of products Direct labor-hours, Product Y 8,200 40 Product Z 3,800 180 1. 3,800 8,200 4. What is the activity rate for the Machine Setups activity cost pool? 灣灣彩 Activity rate per setup 15 of 15 Axt > < Prev 4 5 9. 92 F AQI…
Maxey & Sons manufactures two types of storage cabinets—Type A and Type B—and applies manufacturing overhead to all units at the rate of $120 per machine hour. Production information follows. Type A Type BAnticipated volume (units) 24,000 45,000 Direct-material cost per unit $ 28 $ 42 Direct-labor cost per unit 33 33 The controller, who is studying the use of activity-based costing, has determined that the firm’s overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities’ three respective cost drivers, follow. Type A Type B TotalSetups 140 100 240 Machine hours 48,000 67,500 115,500 Outgoing shipments 200 150 350 The firm’s total…
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7...new...continue b Sage Industries and Pronghorn Inc. enter into an agreement that requires Pronghorn Inc. to build three diesel-electric engines to Sage’s specifications. Upon completion of the engines, Sage has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2020, and requires annual rental payments of $405,443 each January 1, starting January 1, 2020.Sage’s incremental borrowing rate is 8%. The implicit interest rate used by Pronghorn and known to Sage is 7%. The total cost of building the three engines is $2,685,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Sage depreciates similar equipment on a straight-line basis. At the end of the lease, Sage assumes title to the engines. Collectibility of the lease payments is probable. (b) Prepare the journal entry to record the transaction on January 1, 2020, on the books of…
Trying to find the activity based costing of the following for the allocated overhead
Qriole Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, William Brown, has developed the following information: Estimated wheels produced Direct labour hours per wheel Car Car wheels $ Truck 45,000 11,000 4 Total estimated overhead costs for the two product lines are $1,340,000. Calculate the overhead cost assigned to the car wheels and truck wheels, assuming that direct labour hours are used to allocate overhead costs. 8 180,000
Give the proper explanation.

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