Estimated Еxpected Activity Activity Cost Pool Activity Measure Machine related machine hours Machine setups number of setups Purchase orders number of orders General factory direct labor hours Totals Overhead Cost $1,500,000 $300,000 50,000 MHs 750 setups $192,500 3,500 orders $504,000 $2,496,500 36,000 DLHS Activity Measure machine hours number of setups Product Delta Product Sigma 28,000 22,000 350 400 number of orders 1,900 1,600 direct labor hours 20,000 16,000

The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express the companys maintenance costs as an equation where x represents the gallons of paint produced. Then estimate the fixed and variable costs. Predict the maintenance costs i190,000 gallons of paint are produced. Predict the maintenance costs if 81,000 gallons of paint are produced. Using Excel, create a scatter graph of the cost data and explain the relationship between gallons of paint produced and equipment maintenance expenses.

Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?

The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): 64,900 per year Variable costs (supplies): 1.35 per maintenance hour Estimated usage by: Actual usage by: Required: 1. Calculate a single charging rate for the Maintenance Department. 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments?

Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is: Previously, Sanjay Bhatt, Firenza Companys controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 50,000. Sanjay has been reading about activity-based costing, and he wonders whether or not it might offer some advantages to his company. He decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setups for setup cost, engineering hours for engineering cost, and machine hours for other. Budgeted amounts for these drivers are 5,000 purchase orders, 500 setups, and 2,500 engineering hours. Sanjay has been asked to prepare bids for two jobs with the following information: The typical bid price includes a 40 percent markup over full manufacturing cost. Required: 1. Calculate a plantwide rate for Firenza Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate activity rates for the four overhead activities. What is the bid price of each job using these rates? 3. Which bids are more accurate? Why?

Self-Construction Olson Machine Company manufactures small and large milling machines. Selling prices of these machines range from 35,000 to 200,000. During the 5-month period from August 1, 2019, through December 31, 2019, Olson manufactured a milling machine for its own use. This machine was built as part of the regular production activities. The project required a large amount of time front planning and supervisory personnel, as well as that of some of the companys officers, because it was a more sophisticated type of machine than the regular production models. Throughout the 5-month period, Olson charged all costs directly associated with the construction of the machine to a special account entitled Asset Construction Account. An analysis of the charges to this account as of December 31, 2019, follows: Olson allocates factory overhead to normal production as a percent of direct labor dollars as follows: Olson uses a flat rate of 40% of direct labor dollars to allocate general and administrative overhead. During the machine testing period, a cutter head malfunctioned and did extensive damage to the machine table and one cutter housing. This damage was not anticipated and was the result of an error in the assembly operation. Although no additional raw materials were needed to make the machine operational after the accident, the following labor for rework was required: Olson has included all these labor charges in the asset construction account. In addition, it included in the account the repairs and maintenance charges of 1,340 that it incurred as a result of the malfunction. Required: 1. Compute, consistent with GAAP and common practice, the amount that Olson should capitalize for the milling machine as of December 31, 2019, when it declares the machine operational. 2. Next Level Identify the costs you included in Requirement 1 for which there are acceptable alternative procedures. Describe the alternative procedure(s) in each case.

Fulcrum Industries manufactures dining chairs and tables. The following information is available in December 2020:                                           Dining Chairs             Tables           Total CostMachine setups                      200                         600              $48,000Inspections                              250                         470              $72,000Labor hours                          2,600                     2,400 Fulcrum is considering switching from one overhead rate based on labor hours to activity-based costing.InstructionsPerform the following analyses for these two components of overhead:a. Compute total machine setups and inspection costs assigned to each product, using a single overhead rate.b. Compute total machine setups and inspection costs assigned to each product, using activity-based costing.c. Comment on your findings.

Management of Ellen Software Services (ESS) has recently implemented a TQM program to eliminate a serous level of "program bugs" that plagued its recent product releases. The following activities and their costs were taken from ESS's records. The data are for 2019 (the year prior to the TQM program) and 2021 (the year after the start of the TQM program). 2019 2021 Design documentation standards development 100,000 Documentation of customer training process 20,000 Documentation of changes to software 5,000 20,000 Customer training 100,000 130,000 Software testing - Customer site 130,000 80,000 Software – testing – pre-release 50,000 140,000 Telephone "on-line" customer problem support 90,000 60,000 Software corrections and redesign 50,000 20,000 Field "trouble shooting" for customer support 140,000 80,000 Costs of Contract cancellations 180,000 30,000 Revenues lost due to delivery date delays 120,000 Training for systems designers/programmers 100,000 250,000 Training for sales staff…

Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labor hours in the Assembly Department. At the beginning of 2020, the following estimates were provided for the coming year: Direct labor hours Machine hours Direct labor cost Manufacturing overhead costs Machining Direct labor hours Machine hours Direct material cost Direct labor cost 10,000 DLH 100,000 MH $80,000 $250,000 The accounting records of the company show the following data for Job # 846: Machining 50 DLH 170 MH Assembly 90,000 DLH 5,000 MH $2,700 $400 $720,000 $360,000 Assembly 120 DLH 10 MH $1,600 $900 4 Required: 1. Compute the manufacturing overhead allocation rate for each department. 2. Compute the total cost of Job #846. 3. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.

The Pangasinan plant of the Pilipinas Company manufactures cash registers. It plansto implement an activity-based costing system. The controller has prepared thefollowing estimates regarding cost pools and activity levels for the next year.Cost PoolActivity CostsActivity driver levelsElectricityP100,00040,000 kwhMachine setups300,0001,500 setup hoursMaterial moves80,00040,000 movesQuality inspections120,00030,000 inspectionsTotalP600,000The plant’s present cost accounting system allocates manufacturing overhead to jobs using aplant-wide overhead rate based on machine hours. The total machine hours for the comingyear are estimated to be 100,000 hours.The company has received a request for a bid to deliver 2,000 units of its cash register modelMAI. The following estimates pertain to the production of 2,000 units of MAI:Direct materials costP30,000Direct labor (P10/hour)P15,000Machine hours2,000Setup hours50Electricity (Kwh)2.000Number of quality inspections500Number of material…