Jason's Outdoors manufactures two products: snow skis and water skis. Jason's managerial accountant suspects that product cost distortion through factory overhead allocation is occurring where snow skis are underpriced and water skis are overpriced. Based on this information, which of the following statements is true? a. Snow skis likely consumed a larger proportion of factory overhead than was allocated. b. Jason's should expand production of snow skis. c. Jason's accountant should ignore the cost distortions. d. Jason's concludes that it is applying its factory overhead properly.
Q: Computing product costs in an ABC system The Alexander Manufacturing Company in Rochester,…
A: 1) Activity Allocation base Cost allocated to each unit Amount $ Start station Number of raw…
Q: Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces…
A: Variable cost depends upon the production of goods or services that is increment of sales increases…
Q: A owner of a bike shop specializes in custom-built bikes. The Sales Manager & CFO want to talk to…
A: Conventional method of recovering overhead based on single overhead basis is not a proper allocation…
Q: Maggie Co manufactures two video consoles: handheld and home. The handheld are smaller and less…
A: ABC Costing means Activity Based Costing in which the overhead costs are allocated to each different…
Q: Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM), and organized as a…
A: The question is related to Activity Based Costing and Traditional costing system. Under Traditional…
Q: Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost…
A: Hey, since there are multiple questions posted, we will answer the first question. If you want any…
Q: a. The current cost accounting system charges overhead to products based on machine-hours. What unit…
A: Calculation of Overhead Rate = Total overhead Cost ÷ Total Machine hours Total Machine Hours =…
Q: Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are…
A: Case 1:Under ABC CostingActivity based costing allocates manufacturing overhead on a more logical…
Q: Kertas, Inc. produces paper and office supplies and uses the just-in-time inventory system.…
A: Just in time inventory system is the system where the Purchase is done only when it is required , so…
Q: Product costs Labor-hours per case 7.8 3.8 1.0 Total cases produced 1,000…
A: A) Computation of missing amounts in the table under the current cost system: Allocation rate per…
Q: Which of the following statements is true regarding current manufacturing companies? Select one: O…
A: A manufacturing company is a business enterprise that produces goods or products from raw materials…
Q: Cape Cod Shirt Shop manufactures T-shirts and decorates them with custom designs for retail sale on…
A: Fixed expenses remain fixed in a period, variable expenses vary with each production unit.
Q: Perez Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and…
A: Activity Pools Cost Driver Manufacturing overheads (In $) Activity consumed by Decoder P Activity…
Q: Matchless Technologies Company has been purchasing carrying cases for its portable tablets at a…
A: Formula: Total cost per unit = Direct materials + Direct labor + Factory overhead. Sum of direct…
Q: A stapler manufacturer uses a single plantwide predetermined overhead allocation rate to allocate…
A: Step 1: Overhead cost is the cost spent by the business over and above the labor cost. It can be…
Q: Solomon Chairs, Incorporated makes two types of chairs. Model Diamond is a high-end product designed…
A: The unit cost is computed by dividing the total production cost for a product by total number of…
Q: Asbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial.…
A: Required A PersonalCommercialTotalTotal Overhead$1,059,000.00$843,000.00$1,902,000.00Unit Cost per…
Q: Assume that CBI drops the products identified in requirements (a) and (c) above. Recalculate the…
A: d-1: Creamy Crunch Direct labor cost per hour 6 Direct labor hours…
Q: Baird Electronics produces video games in three market categories: commercial, home, and miniature.…
A: ABC cost system is an activity-based cost system that identifies all the activities in the entity…
Q: Describe the circumstances under which the firm should employ each of the two manufacturing methods.…
A: Manufacturing cost is defined as a part under the cost accounting, which helps the manufacturing…
Q: Asbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial.…
A: ACTIVITY BASED COSTINGActivity Based Costing is a Powerful tool for measuring…
Q: Asbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial.…
A: The overhead allocation is a method of allocating indirect costs to the goods produced. It can be…
Q: $24 100 total 2.200 total $30 20 total 800 total
A: BBQ FISH SALT & VINEGAR Production volume 2,500 5,000 Direct…
Q: The Tamarisk manufactures double-sided pens-a pen on one side, a highlighter on the other. As the…
A: Fixed Manufacturing Overhead (MOH) Volume Variance: The fixed manufacturing overhead volume variance…
Q: Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are…
A: The overhead rate is calculated as estimated overhead cost divided by estimated base activity.
Q: Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces…
A: When a single activity is used for allocating overhead then a single overhead rate whereas in case…
Q: Asbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial.…
A: Predetermined Overhead Rate :— It is the rate used to allocate manufacturing overhead cost to cost…
Q: Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces…
A: The activity-based costing is the way of allocating overheads to the cost of the product. Under…
Q: Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are…
A: The overhead cost is allocated to the production on the basis of predetermined overhead rate.
Q: Setting materials, labor, and overhead standards is challenging. If standards are set too low,…
A:
Q: Which of the following is a proper classification of this cost?
A: Answer: Period cost
Q: Computing product costs in an ABC system The Alright Manufacturing Company in Rochester, Minnesota,…
A: Requirement 1: Compute the missing figures for the ABC cost.
Q: General factory Machine hours logged Based on the above descriptions, which of the following…
A: Manufacturer manufacture products with the use of machines, use labor, and incurred costs such as…
Q: Great Furniture Inc. (GF) manufactures a variety of furniture for household use and just two items…
A: Manufacturing Cost -The expenses incurred in the process of producing a product are known as…
Q: 54. To calculate a beginning or ending inventory ($ amount): The appropriate Inventory quantity x…
A: Truethe formula provided is correct for calculating the value of inventory. Multiply the quantity of…
Q: Asbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial.…
A: ACTIVITY BASED COSTINGActivity Based Costing is a Powerful tool for measuring…
Q: Chocolate Bars, Inc. (CBI), manufactures creamy deluxe chocolate candy bars. The firm has developed…
A: format: Product costs: Labor-hours per case Total cases produced Material cost per case…
Q: Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data…
A: CVP AnalysisThis tool of Cost and Management Accounting is termed as Cost-Volume-Profit Analysis as…
Q: Bonita, Inc. produces two types of gas grills: a family model and a deluxe model. Bonita's…
A: Lets understand the basics. There are two costing system are followed which are, (1) Traditional…
Q: Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are…
A: The overhead is applied to production on the basis of a pre-determined overhead rate. The…
Q: Bluefield Corporation has two product lines, A and B. Bluefield has identified the following…
A: Predetermined Overhead Rate:— It is the rate used to allocate manufacturing overhead cost to cost…
Q: Cantrall Company is trying to decide which pr materials costs are $4.00 per unit for each proc per…
A: When deciding between options or alternatives, there are two sorts of costs to consider: relevant…
Q: In Al-Waha Water Bottling Company, costs of setting up factory machinery for a new production run…
A: Cost accounting is the accounting procedure followed by a manufacturing business to estimate the…
Q: Fountain Water Products (FWP) manufacturers water bottles. They have historically used a traditional…
A: To calculate the difference between the ABC costing and the traditional system, you need to compare…
Q: Chocolate Bars, Inc. (CBI), manufactures creamy deluxe chocolate candy bars. The firm has developed…
A: Note: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts…
Q: RelyaTech Corporation manufactures a number of products at its highly automated factory. The…
A: Management should examine a variety of aspects while rating items in order to optimize profit. The…
Unlock instant AI solutions
Tap the button
to generate a solution
Click the button to generate
a solution
- Maglie Company manufactures two video game consoles: handheld and home. The handheld consoles are smaller and less expensive than the home consoles. The company only recently began producing the home model. Since the introduction of the new product, profits have been steadily declining. Management believes that the accounting system is not accurately allocating costs to products, particularly because sales of the new product have been increasing. Management has asked you to investigate the cost allocation problem. You find that manufacturing overhead is currently assigned to products based on their direct labor costs. For your investigation, you have data from last year. Manufacturing overhead was $1,237,000 based on production of 290,000 handheld consoles and 100,000 home consoles. Direct labor and direct materials costs were as follows. Handheld Home Total Direct labor $ 1,135,250 $ 411,000 $ 1,546,250 Materials 700,000 671,000 1,371,000…Which of the following statements is false? (You may select more than one answer.)a. In recent years, most companies have experienced increasing manufacturing overhead costs in relation to direct labor costs.b. Activity-based costing systems may use direct labor-hours and/or machine-hoursto assign unit-level costs to products.c. Facility-level costs are not caused by particular products.d. Product-level costs are larger for high-volume products than for low-volumeproducts.Baird Chairs, Incorporated makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Direct Cost per Unit Direct materials Direct labor Category Unit level Batch level Product level Facility level Total Model Diamond (D) $19.50 per unit $ 19.10/hour x 2.00 hours production time Type of Product Estimated Cost $ 247,500 825,000 704,000 572,000 $ 2,348,500 a. Model Diamond a. Model Gold b. Model Diamond b. Model Gold Cost Driver Number of units. Number of setups Number of TV commercials Number of machine hours The market price for office chairs comparable to Model Diamond is $118 and to Model Gold is $75. Cost per Unit Model Gold (G) $9.90 per…
- Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's upholstered chairs appears below:Airco Company is tempted to consider support department costs to be facility-level costs that do not need to be applied to products. Which of the following explains what is misguided about this approach? a.Product costs may be inaccurate because support department services may be used more heavily by some products than others. b.Product costs may be inaccurate because incorrect cost drivers are used. c.Product costs may be inaccurate because straight-line depreciation on factory equipment is treated as a general and administrative expense on the income statement. d.Product costs may be inaccurate because direct labor and direct materials are not correctly accounted for in the product costing system.Nutterco, Inc., produces two types of nut butter: peanut butter and cashew butter. Of the two,peanut butter is the more popular. Cashew butter is a specialty line using smaller jars and fewerjars per case. Data concerning the two products follow: Annual overhead costs are listed below. These costs are classified as fixed or variable with respect to the appropriate activity driver. Required:1. Prepare a traditional segmented income statement, using a unit-level overhead rate based ondirect labor hours. Using this approach, determine whether the cashew butter product lineshould be kept or dropped.2. Prepare an activity-based segmented income statement. Repeat the keep-or-drop analysisusing an ABC approach.
- Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM). and organized as a separate division within the company. Most manufacturing plants at MM use an ABC system, but UM has always used a traditional product costing system. Bob Miller, the plant controller at UM, has decided to experiment with ABC and has asked you to help develop a simple ABC system that would help him decide if it was useful. The controller's staff has identified costs for the first month in the four overhead cost pools along with appropriate cost drivers for each pool. Activity Drivers Direct material cost Costs 154, 000 1,600, 900 900, 000 450, 000 Cost Pools Incoming inspection Production Machine-hours Machine setup Shipping Setups Units shipped The company manufactures two basic products with model numbers 308 and 510. The following are data for production for the first month as part of MM. Products 308 510 $ 45,000 $173,800 50,000 $ 32,000 $283,809 118,800 Total direct material costs Total…Industrial Robots does not manufacture its own motors or computer chips. Its premium product differs from its standard product in having heavier-duty motors and more computer chips for greater flexibility. As a result, Industrial Robots manufactures a higher fraction of the standard product’s value itself, and it purchases a higher fraction of the premium product’s value. Use the following data to allocate $850,000 in overhead on the basis of labor cost and materials cosAsbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial. The Personal grinders have a smaller capacity and are less durable than the Commercial grinders. ACE only recently began producing the Commercial model. Since the introduction of the new product, profits have been steadily declining, although sales have been increasing. The management at ACE believes that the problem might be in how the accounting system allocates costs to products. The current system at ACE allocates manufacturing overhead to products based on direct labor costs. For the most recent year, which is representative, manufacturing overhead totaled $2,037,000 based on production of 30,000 Personal grinders and 10,000 Commercial grinders. Direct costs were as follows: Personal Commercial Total Direct materials $ 1,445,000 $ 620,000 $ 2,065,000 Direct labor 1,030,000 667,500 1,697,500 Management has determined that overhead costs are caused by three cost…
- The Chopin Company has decided to introduce a new product. The new product can be manufactured by either a computer-assisted manufacturing (CAM) or a labor-intensive production (LIP) system. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs for each of the two methods are as follows. CAM System: Direct Material = $5.0 Direct Labor (DLH) = 0.5 DLH X $12 = $6 Variable Overhead = 0.5DLHx$6 = $3 Fixed Iverhead* = $ 2,440,000 LIP System: Direct Material = $5.6 Direct Labor (DLH) = 0.8 DLH X $9 = $7.2 Variable Overhead = 0.8 DLH X $6 = $4.8 Fixed Overhead* = $1,320,000 *These costs are directly traceable to the new product line. They would not be incurred if the new product were not produced. The company’s marketing research department has recommended an introductory unit sales price of $30. Selling expenses are estimated to be $500,000 annually plus $2 for each unit sold. (Ignore income taxes.) Required: Calculate the estimated…The cost accountant for M. Company wants to determine the cost of factory overhead. Based on observation and discussions with plant workers, you feel that five accounts are most relevant. Two are fixed- supervisory salaries and depreciation- and the remaining three are variable. Indirect labor is primarily used to move materials and varies with a number of moves. The largest component of utilities is electricity to run production machinery; which is driven by machine hours. Purchasing seems to be driven by the number of purchase orders. The accounts and their balances for the past six months are shown below: Indirect Plant and Labor Supervisory Equipment Cost Utilities Purchasing Salaries Depreciation July $14,250 $12,000 $38,200 $20,000 $6,500 Aug 15,800 10,600 35,400 23,000…Chocolate Bars, Inc. (CBI), manufactures creamy deluxe chocolate candy bars. The firm has developed three distinct products: Almond Dream, Krispy Krackle, and Creamy Crunch. CBI is profitable, but management is quite concerned about the profitability of each product and the product costing methods currently employed. In particular, management questions whether the overhead allocation base of direct labor-hours accurately reflects the costs incurred during the production process of each product. Skipped In reviewing cost reports with the marketing manager, Steve Hoffman, who is the cost accountant, notices that Creamy Crunch appears exceptionally profitable and that Almond Dream appears to be produced at a loss. This surprises both him and the manager, and after much discussion, they are convinced that the cost accounting system is at fault and that Almond Dream is performing very well at the current market price. Steve decides to hire Jean Sharpe, a management consultant, to study the…