EXERCISE 7-4 Second-Stage Allocation [LO4] Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-base costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor .. Machine processing Machine setups. $7.00 per direct labor-hour $3.00 per machine-hour $40.00 per setup $160.00 per order $120.00 per shipment $800.00 per product Production orders Shipments. Product sustaining.

EXERCISE 7-4 Second-Stage Allocation [LO4] Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-base costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor .. Machine processing Machine setups. $7.00 per direct labor-hour $3.00 per machine-hour $40.00 per setup $160.00 per order $120.00 per shipment $800.00 per product Production orders Shipments. Product sustaining.

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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Exercise 17-17 (Algo) Using activity-based costing to allocate overhead, compute product cost and gross profit LO P3 Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Assembly Inspections Purchase orders. Finishing Support Additional production information concerning its two models follows. Units and Activities Units produced Machine hours Setups Activity Machining Setups Inspecting Purchasing Per Unit Selling price per unit Direct materials cost per unit Direct labor cost per unit Required 1 Budgeted Cost $ 311,000 22,000 $ 333,000 $ 232,000 $ 134,000 Activity Model X 2,000 2,200 Machining Setups Inspecting Purchasing 20 520 360 Required 2 Model Z 4,000 5,000 Model X $ 415 155 140 40 300 180 Required 3 Activity Cost Driver Machine hours (MH) Setups 1. Compute the activity rate for each activity using activity-based costing. 2. Using activity-based costing, compute the overhead…
Exercise 19-15 (Algo) Absorption costing and overproduction LO C1 A manufacturer reports direct materials of $6 per unit, direct labor of $3 per unit, and variable overhead of $5 per unit. Fixed overhead Is $156,000 per year, and the company estimates sales of 15,600 units at a sales price of $26 per unit for the year. The company has no beginning finished goods inventory. 1. If the company uses absorption costing, compute gross profit assuming (a) 15,600 units are produced and 15,600 units are sold and (b) 19,500 units are produced and 15,600 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 19,500 units instead of producing 15,600? Assume the company sells 15,600 units. Hint: Calculations are not required. Complete this question by entering your answers in the tabs below. Required 1 Required 2 If the company uses absorption costing, compute gross profit assuming (a) 15,600 units are produced and 15,600 units are…
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EXERCISE 1-7 Direct and Indirect Costs L01-1 2.000.81 10 Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Juris Required: 1. 2. 3. 4. a. b. a. b. the Untus ha babubong asin Direct materials.. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense.. Sales commissions...... Variable administrative expense. b. Average Cost per Unit $7.00 $4.00 $1.50 $5.00 $3.50 $2.50 $1.00 $0.50 Assume the cost object is units of production: What is the total direct manufacturing cost incurred to make 20,000 units? What is the total indirect manufacturing cost incurred to make 20,000 units? Assume the cost object is the Manufacturing Department and that its total output is 20,000 units. How much total manufacturing cost is directly traceable to the Manufacturing Department? How much total manufacturing cost is an indirect cost that…
INTEGRATION EXERCISE 4 Plantwide and Departmental Overhead Allocation; Activity-Based Costing; Segmented Income Statements LO3–1, LO3–2, LO3–3, LO3–4, LO4–4, LO4–5, LO5–1, LO5–3, LO5–4 Koontz Company manufactures two models of industrial components—a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and page 599it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz’s controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars): Basic Advanced Total Number of units produced and sold 20,000 10,000 30,000 Sales $3,000,000 $2,000,000 $5,000,000 Cost of goods sold 2,300,000 1,350,000 3,650,000 Gross margin 700,000 650,000 1,350,000 Selling and administrative expenses 720,000 480,000…
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Assignment Ch 4 еBook Print Item Activity-Based Costing and Product Cost Distortion Four Finger Appliance Company manufactures small kitchen appliances. The product line consists of blenders and toaster ovens. Four Finger Appliance presently uses the multiple production department factory overhead rate method. The factory overhead is as follows: Assembly Department $186,000 Test and Pack Department 120,000 Total $306,000 The direct labor information for the production of 7,500 units of each product is as follows: Assembly Department Test and Pack Department Blender 750 dlh 2,250 dlh Toaster oven 2,250 750 Total 3,000 dlh 3,000 dlh Four Finger Appliance used direct labor hours to allocate production department factory overhead to products. The management of Four Finger Appliance Company has asked you to use activity-based costing to allocate factory overhead costs to the two products. You have determined that $81,000 of factory overhead from each of the production departments can be…
Exercise 17-12 (Algo) Cost drivers for activity-based costing LO P3 A manufacturer reports three activities: finishing production; product design; and sales order processing. Determine whether each of the following cost drivers relates to finishing production, design, or order processing. Cost Driver 1. Direct labor hours to finish production 2. Number of design changes 3. Finishing machine hours 4. Number of design hours 5. Number of shipments made 6. Number of sales orders processed Activity