Freda Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: Number of Setups Machine Hours Packing Orders Product D 10 F 10 Cost per pool $11,000 500 75 2,000 175 $60,000 $18,750 What is the allocation rate per setup using activity-based costing?
Q: Sales = 962,000, Variable Costs = 467,500, Fixed Costs = 165,000
A: Explanation of Operating Leverage: This is a measure that shows how changes in sales volume affect a…
Q: Solution to this financial accounting question
A: Explanation of Sales (Revenue)Sales, also known as revenue, is the total amount generated from the…
Q: Flynn Company uses a perpetual inventory system and reported $526,000 of inventory at the beginning…
A: Step 1: Understand the ProblemFlynn Company uses a perpetual inventory system, meaning:Inventory is…
Q: Provide correct answer this question general accounting
A: Step 1: Define Capital BudgetingIn management accounting, capital budgeting is a crucial process in…
Q: Financial accounting
A: Important Points:In 2019, the first $132,900 in earnings was subject to the 6.2% Social Security tax…
Q: Mastery Problem: Differential Analysis and Product Pricing WoolCorp WoolCorp buys sheep's wool from…
A: Step 1: Step 2: Step 3: Step 4:
Q: Mastery Problem: Activity-Based Costing WoolCorp WoolCorp buys sheep's wool from farmers. The…
A:
Q: Financial Accounting Question please answer
A: Present Value (PV) of withdrawals at Year 5Kristen's son will withdraw $5,000 at the beginning of…
Q: General accounting
A: Step 1: Define Net IncomeNet income remains after the sales are counted and the bills are…
Q: How much?
A: Explanation of Sales Revenue:Sales revenue represents the total amount of money a company earns from…
Q: Solution
A: Given Data:Net income: $750,000Interest expense: $150,000Times interest earned ratio (TIE): 9We are…
Q: What is the PE ratio on these general accounting question?
A: Step 1: Define Price-Earnings RatioThe price-earnings ratio is useful for determining the valuation…
Q: Hi expert please give me answer general accounting
A: Step 1: Define Accumulated DepreciationIn accounting, accumulated depreciation is a contra-asset…
Q: please help with this problem thank you
A:
Q: Why do qualitative overrides affect measurement hierarchy? a) Measurements follow rigid rules b)…
A: Option a:This option is incorrect because while measurements often follow rigid rules, qualitative…
Q: Can you please solve this accounting problem?
A: Step 1: Define Fixed ExpensesThe cost of fixed expenses is constant. These are typically paid…
Q: DIRECT COST VARIANCES Gaines Manufacturing Co. has the following data: Standards allowed to produce…
A: The direct labor efficiency variance measures whether the company used more or fewer labor hours…
Q: Please solve this accounting problem not use ai
A: Step 1: Define Repurchase DecisionOccasionally, a company may have extra funds that might be put to…
Q: General Accounting Question need help with this question
A: Approach to solving the question: For better clarity of the solution, I have provided the formula…
Q: Determine Other operations usage
A: Total Monthly UsageThe total energy usage is 50,000 kWh. We will allocate this energy among the…
Q: answer?
A: Explanation of Days Sales Outstanding (DSO): Days Sales Outstanding is a financial metric that…
Q: Provide correct answer the financial accounting question
A: Step 1: Definition of Rate of ReturnThe rate of return on an investment is its profit or loss…
Q: A company's normal selling price for its product is $28 per unit. However, due to market…
A: Step 1: Data ProvidedUnits in Inventory: 280 unitsCost per Unit: $24Replacement Cost: $21Selling…
Q: Provide correct answer the financial accounting question
A: Step 1: Define Semi-Annual Compounding PeriodsCompounding periods, in the context of bonds, refer to…
Q: Give the right answer
A: Key Points to Remember About the Weighted-Average Method:Beginning work in process (WIP) units and…
Q: Answer this accounting question
A: Explanation of Contextual Materiality:Contextual materiality refers to the consideration of both…
Q: The anticipated purchase of purchase of a fixed asset for $400,000, with a useful life of 5 years…
A: The key information provided in the problem statement is:The fixed asset purchase is for $400,000The…
Q: Subject = General Account
A: Step 1: Understand the Lower-of-Cost-or-Market (LCM) RuleThe LCM rule states that inventory must be…
Q: Why is it important that foreign currency financial statements are translated at the appropriate…
A: Foreign currency translation is a crucial aspect of financial reporting for multinational companies.…
Q: Bolding inc contribution margin ratio is 64% solve this accounting questions
A: Step 1: Define Net Operating IncomeThe last derivation of the contribution margin income statement…
Q: 11 A company purchased a plot of land for $150,000 for the purposes of harvesting timber for resale.…
A: Step 1: Calculation of Total Depletable CostDepletable Cost = Land Purchase Price + Survey Cost -…
Q: Question 4 points
A: Correct Answer: d) Different user needs affect reporting choicesExplanation:Diverse Stakeholder…
Q: correct answer for this general accounting question
A: Step 1: Depth Adjustment CostDepth adjustment cost is +12% every 100m depth. So, for 100m depth…
Q: Account
A: Step 1: Given DataInventory and Purchases:Beginning Inventory: 15 units at $75 each.Purchased on…
Q: Can you please solve this general accounting question?
A: Step 1: Define Receivables TurnoverThe number of times a business converts its receivables into cash…
Q: Carrie D'Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the…
A: 2024: Ordinary Income and Separately Stated ItemsOrdinary IncomeSales Revenue: 1,214,000Cost of…
Q: 18 At year end, a company has a pending lawsuit concerning damages for a defect in one of its…
A: Correct: A. The amount can reasonably be estimated and it is probable that company will lose the…
Q: Part 1 of 5 05 bints Knowledge Check 01 Which of the following statements about dividends are true?…
A: The question relates to the concept of dividends in a corporation. Dividends are a portion of a…
Q: Zerbel Company, a wholesaler of large, custom-built air conditioning units for commercial buildings,…
A: Step 1: Definition of High-Low Method:The high-low method is used to separate mixed costs into their…
Q: Variable costing is?
A: Total variable cost per unit = Direct materials + Direct labor + Variable manufacturing overhead +…
Q: Question: Account Dick Jones, a single taxpayer, had $70,000 in taxable income before personal…
A: Step 1: Understand Alternative Minimum Taxable Income (AMTI)The AMTI is calculated by adjusting…
Q: Shown below is activity for one of the products of Denver Office Equipment: January 1 balance, 530…
A: The FIFO (First-In, First-Out) method of inventory valuation assumes that the first goods purchased…
Q: Question:- Account
A: Explanation: As per the question, currently the recorded inventory is 5,000 units purchased at a…
Q: Need Correct Answer of this Account Problem
A: Step 1: DefinitionsThe LCM rule compares the historical cost of inventory to its market value, where…
Q: Both MCQ's answer want.
A: Step 1: Understanding Dollar-Value LIFOUnder the DVL method, inventory is valued at base-year costs…
Q: Pablo Management has three employees, each of whom earns $175 per day. They are paid on Fridays for…
A: Pablo Management needs to account for the wages incurred on December 31, even though employees will…
Q: Provide correct answer Accounting question
A: Step 1: Define Payroll-Related ExpensesA company's payroll is the salaries and wages it pays to its…
Q: provide answer
A: Step 1: Include Taxable IncomeWages: $34,500 (fully taxable).Bank Interest: $275 (fully…
Q: need answer to the general accounting Q
A: Explanation of Transaction Flow MappingTransaction flow mapping is a method of visually representing…
Q: Hello teacher please help me Accounting question
A: Requirement 1: Journalize the entries to record these transactions. Be sure to enter the year as…
Activity based costing
Step by step
Solved in 2 steps
- Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units of Simple and 146,100 of Removable, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: Â How much is the overhead allocated to each unit of Simple and Removable?The following product costs are available for Stellis Company on the production of erasers: direct materials, $22,000; direct labor, $35,000; manufacturing overhead, $17,500; selling expenses, $17,600; and administrative expenses; $13,400. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 13,750 equivalent units are produced, what is the equivalent material cost per unit? If 17,500 equivalent units are produced, what is the equivalent conversion cost per unit?Evans, Inc., has a unit-based costing system. Evanss Miami plant produces 10 different electronic products. The demand for each product is about the same. Although they differ in complexity, each product uses about the same labor time and materials. The plant has used direct labor hours for years to assign overhead to products. To help design engineers understand the assumed cost relationships, the Cost Accounting Department developed the following cost equation. (The equation describes the relationship between total manufacturing costs and direct labor hours; the equation is supported by a coefficient of determination of 60 percent.) Y=5,000,000+30X,whereX=directlaborhours The variable rate of 30 is broken down as follows: Because of competitive pressures, product engineering was given the charge to redesign products to reduce the total cost of manufacturing. Using the above cost relationships, product engineering adopted the strategy of redesigning to reduce direct labor content. As each design was completed, an engineering change order was cut, triggering a series of events such as design approval, vendor selection, bill of materials update, redrawing of schematic, test runs, changes in setup procedures, development of new inspection procedures, and so on. After one year of design changes, the normal volume of direct labor was reduced from 250,000 hours to 200,000 hours, with the same number of products being produced. Although each product differs in its labor content, the redesign efforts reduced the labor content for all products. On average, the labor content per unit of product dropped from 1.25 hours per unit to one hour per unit. Fixed overhead, however, increased from 5,000,000 to 6,600,000 per year. Suppose that a consultant was hired to explain the increase in fixed overhead costs. The consultants study revealed that the 30 per hour rate captured the unit-level variable costs; however, the cost behavior of other activities was quite different. For example, setting up equipment is a step-fixed cost, where each step is 2,000 setup hours, costing 90,000. The study also revealed that the cost of receiving goods is a function of the number of different components. This activity has a variable cost of 2,000 per component type and a fixed cost that follows a step-cost pattern. The step is defined by 20 components with a cost of 50,000 per step. Assume also that the consultant indicated that the design adopted by the engineers increased the demand for setups from 20,000 setup hours to 40,000 setup hours and the number of different components from 100 to 250. The demand for other non-unit-level activities remained unchanged. The consultant also recommended that management take a look at a rejected design for its products. This rejected design increased direct labor content from 250,000 hours to 260,000 hours, decreased the demand for setups from 20,000 hours to 10,000 hours, and decreased the demand for purchasing from 100 component types to 75 component types, while the demand for all other activities remained unchanged. Required: 1. Using normal volume, compute the manufacturing cost per labor hour before the year of design changes. What is the cost per unit of an average product? 2. Using normal volume after the one year of design changes, compute the manufacturing cost per hour. What is the cost per unit of an average product? 3. Before considering the consultants study, what do you think is the most likely explanation for the failure of the design changes to reduce manufacturing costs? Now use the information from the consultants study to explain the increase in the average cost per unit of product. What changes would you suggest to improve Evanss efforts to reduce costs? 4. Explain why the consultant recommended a second look at a rejected design. Provide computational support. What does this tell you about the strategic importance of cost management?
- The following product Costs are available for Haworth Company on the production of chairs: direct materials, $15,500; direct labor, $22.000; manufacturing overhead, $16.500; selling expenses, $6,900; and administrative expenses, $15,200. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 7,750 equivalent units are produced, what is the equivalent material cost per unit? If 22,000 equivalent units are produced, what is the equivalent conversion cost per unit?The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?Rex Industries has two products. They manufactured 12,539 units of product A and 8.254 units of product B. The data are: What is the activity rate for each cost pool?
- Rocks Industries has two products. They manufactured 12,539 units of product A and 8.254 units of product B. The data are: Â What is the activity rate for each cost pool?Cool Pool has these costs associated with production of 20,000 units of accessory products: direct materials, $70; direct labor, $110; variable manufacturing overhead, $45; total fixed manufacturing overhead, $800,000. What is the cost per unit under both the variable and absorption methods?Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Plata produces two models of microwave ovens with the following activity demands: The companys normal activity is 21,000 machine hours. Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system: a. 230,000 b. 240,000 c. 280,000 d. 190,000
- Larsen, Inc., produces two types of electronic parts and has provided the following data: There are four activities: machining, setting up, testing, and purchasing. Required: 1. Calculate the activity consumption ratios for each product. 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). When compared with the activity ratios, what can you say about the relative accuracy of a plantwide rate? Which product is undercosted? 3. What if the machine hours were used for the plantwide rate? Would this remove the cost distortion of a plantwide rate?Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: aCalculated using number of dies as the single unit-level driver. bCalculated by multiplying the consumption ratio of each product by the cost of each activity. Required: 1. Using the five most expensive activities, calculate the overhead cost assigned to each product. Assume that the costs of the other activities are assigned in proportion to the cost of the five activities. 2. Calculate the error relative to the fully specified ABC product cost and comment on the outcome. 3. What if activities 1, 2, 5, and 8 each had a cost of 650,000 and the remaining activities had a cost of 50,000? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Comment on the implications for the approximately relevant approach.Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases: A. Total direct materials cost B. Electricity costs of 1,000 per month plus 0.10 per kilowatt-hour C. Per-unit cost of straight-line depreciation on factory equipment D. Salary of quality control supervisor, 20,000 per month E. Per-unit direct labor cost
