Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains thefollowing six activity cost pools and activity rates:Activity Cost PoolLabor-relatedMachine-relatedMachine setupsProduction ordersShipmentsGeneral factoryActivity Rates$ 8.00 per direct labor-hour$9.00 per machine-hour$ 50.00 per setup$ 100.00 per order$ 180.00 per shipment$ 9.00 per direct labor-hourCost and activity data have been supplied for the following products:Direct materials cost per unitJ78$ 4.50$ 4.75B52$ 45.004,000$ 10.00500Direct labor cost per unitNumber of units produced per yearTotal ExpectedActivityJ78B52Direct labor-hours90050Machine-hours2,90020Machine setups44Production orders84Shipments124Required:Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2decimal places.)J78B52Unit product cost

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Answered: Larner Corporation is a diversified…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 19E

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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?
Kenkel, Ltd. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 80,000. b. Requisitioned raw materials to production, 80,000. c. Distributed direct labor costs, 10,000. d. Factory overhead costs incurred, 60,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 225,000, on account.
Allocating selling and administrative expenses using activity-based costing Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: In addition, the company incurs selling and administrative expenses of 414,030. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related to its three major nonmanufacturing activities: customer service, sales order processing, and advertising support. The advertising support is in the form of advertisements that are placed by Shrute Inc. to support the retailers sale of Shrute copiers to consumers. The budgeted activity costs and activity bases associated with these activities are: Activity-base usage and unit volume information for the three customers is as follows: Instructions Determine the activity rates for each of the three nonmanufacturing activities. Determine the activity costs allocated to the three customers, using the activity rates in (1). Construct customer profitability reports for the three customers, dated for the year ended December 31, using the activity costs in (2). The reports should disclose the gross profit and operating income associated with each customer. Provide recommendations to management, based on the profitability reports in (3).
A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
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?
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?
Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)
Activity-based and department rate product costing and product cost distortions Black and Blue Sports Inc. manufactures two products: snowboards and skis. The factory overhead incurred is as follows: The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Instructions Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 315,000 and 540,000 for the Cutting and Finishing departments, respectively. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. Determine the total and per-unit cost assigned to each product under activity-based costing. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.
Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Labor-related Machine-related Machine setups Production orders. Shipments General factory Activity Rates $ 7.00 per direct labor-hour $ 4.00 per machine-hour $50.00 per setup $ 100.00 per order $ 150.00 per shipment $ 4.00 per direct labor-hour Cost and activity data have been supplied for the following products: Direct materials cost per unit Direct labor cost per unit 378 $ 3.00 $ 3.00 B52 $ 20.00 $ 6.00 2,000 100 Number of units produced per year Total Expected Activity 378 B52 Direct labor-hours. 1,000 20 Machine-hours 2,000 50 Machine setups 6 3 Production orders 5 3 8 3 Shipments Required: Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.) J78 B52 Unit product cost
Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Labor-related Machine-related Machine setups Production orders Shipments General factory Activity Rates $ 7.00 per direct labor-hour $7.00 per nachine-hour $30.00 per setup $ 200.00 per order $140.00 per shipment $7.00 per direct labor-hour Cost and activity data have been supplied for the following products: Direct materials cost per unit Direct labor cost per unit Number of units produced per year Total Expected Activity 378 852 Direct labor-hours 1,200 30 Machine-hours 2,200 50 Machine setups 6 1 Production orders 5 1 7 378 $ 5.50 $ 4.75 4,000 852 $32.00 $ 9.00 100 Shipments Required: Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.) J78 B52 Unit product cost
Slater Corporation is a diversified manufacturer of industrial goods. The company's activity- based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor ... $6.00 per direct labor-hour $4.00 per machine-hour $50.00 per setup $90.00 per order $14.00 per shipment $840.00 per product Machine processing.... Machine setups.. Production orders Shipments .... Product sustaining.. Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year Direct labor-hours... 200 2,000 80 500 Machine-hours . 100 1,500 Machine setups.. Production orders 1 4 1 4 Shipments..... Product sustaining 1 10 1 1 Required: Determine the total overhead cost that would be assigned to each of the products listed above in the activity-based costing system.

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