Maverick Company makes custom covers for air conditioning units for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools: Overhead Costs: $100,000 $50,000 $150,000 Production Overhead Office Expense Total Distribution of Resource Consumption: Activity Cost Pools Making Job Covers 40% Support Other Total 100% Production overhead 42% 18% Office expense 12% 60% 28% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization- sustaining costs. The amount of activity for the year is as follows: Activity Cost Pool Making Covers Job Support Other Annual Activity 2,500 yards 200 jobs Not applicable Required: a) Prepare the first-stage allocation of overhead costs to the activity cost pools by replicating and filling in the table below. Job Making Covers Support Other Total Production Overhead Office Expense

Maverick Company makes custom covers for air conditioning units for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools: Overhead Costs: $100,000 $50,000 $150,000 Production Overhead Office Expense Total Distribution of Resource Consumption: Activity Cost Pools Making Job Covers 40% Support Other Total 100% Production overhead 42% 18% Office expense 12% 60% 28% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization- sustaining costs. The amount of activity for the year is as follows: Activity Cost Pool Making Covers Job Support Other Annual Activity 2,500 yards 200 jobs Not applicable Required: a) Prepare the first-stage allocation of overhead costs to the activity cost pools by replicating and filling in the table below. Job Making Covers Support Other Total Production Overhead Office Expense

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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Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Overhead DirectLabor Hours (dlh) Product A B Painting Dept. $459,138 11,800 dlh 16 dlh 2 dlh Finishing Dept. 56,203 4,900 6 20 Totals $515,341 16,700 dlh 22 dlh 22 dlh The overhead from both production departments allocated to each unit of Product B if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is
Required information Greenwood Company manufactures two products-15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z: Activity Cost Pool Machining Machine setups Production design General factory Activity Measure Machining Number of setups Number of products Direct labor-hours Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Estimated Overhead Cost $ 227,700 $ 153,908 Product Y Product Z 8,700 60 1 8,700 2,300 210 1 1,300 Expected Activity 11,000 MHS 270 setups $ 91,000. $ 257,000 2 products 10,000 DLHS 14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? (Round your answers to 2…
Drilling Company uses activity-based costing and provides this information: Manufacturing Activity Cost Driver Driver Rate Materials handling Number of parts $ 0.60 Machinery Number of machine hours 51.00 Assembly Number of parts 2.85 Inspection Number of finished units 30.00 Drilling has just completed 80 units of a component for a customer. Each unit required 100 parts and 3 machine hours. The prime cost is $1,300 per finished unit. All other manufacturing costs are classified as manufacturing overhead. Required: 1. Compute the total manufacturing costs and the unit costs of the 80 units just completed using ABC costing. 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $180 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $300 per unit. Compute the full product cost per unit, including…
Foam Products, Incorporated, makes foam seat cushions for the automotive and aerospace industries. The company's activity-based costing system has four activity cost pools, which are listed below, along with their activity measures and activity rates: Activity Cost Pool Supporting direct labor. Batch processing Order processing Customer service Activity Measure Number of direct labor-hours Number of batches Number of orders Number of customers Activity Rate $10 per direct labor-hour $90 per batch $286 per order $ 2,602 per customer The company just completed a single order from Interstate Trucking for 2,800 custom seat cushions. The order was produced in four batches. Each seat cushion required 0.3 direct labor-hours. The selling price was $141.10 per unit, the direct materials cost was $102 per unit, and the direct labor cost was $14.20 per unit. This was Interstate Trucking's only order during the year. Required: Calculate the customer margin on sales to Interstate Trucking for the…
Saratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in Its Purchasing Department to better understand how Purchasing Department labor costs are consumed by Individual jobs. To ald the study, the company provided the following data regarding its Purchasing Department and three of its many jobs: Number of employees Average salary per employee Weeks of employment per year Hours worked per week Practical capacity percentage $ 30,000 52 40 85% Requisition Processing 15 Bid Evaluation Inspection 45 30 Minutes per unit of the activity Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 6 3 2 2 1 3 Number of inspections 5 1 5 Now assume that Saratoga Company would like to answer the following "what if" question using its time-driven activity-based costing system: Assuming our estimated activity demands for all jobs in the next period will be as shown below, how will this affect our job…
Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining. $2400000; and assembling. $1200000. Information on the two products is: Direct labor hours Machine hours Number of parts Regular Supreme 10000 15000 30000 90000 160000 Ⓒ$2568000 $1440000. $2160000. $1032000. 10000 Overhead applied to Regular using activity-based costing is
Maxey & Sons manufactures two types of storage cabinets—Type A and Type B—and applies manufacturing overhead to all units at the rate of $120 per machine hour. Production information follows. Type A Type BAnticipated volume (units) 24,000 45,000 Direct-material cost per unit $ 28 $ 42 Direct-labor cost per unit 33 33 The controller, who is studying the use of activity-based costing, has determined that the firm’s overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities’ three respective cost drivers, follow. Type A Type B TotalSetups 140 100 240 Machine hours 48,000 67,500 115,500 Outgoing shipments 200 150 350 The firm’s total…
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Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Painting Dept. Finishing Dept. Totals Overhead $257,800 76,100 $333,900 Direct Labor Hours (dlh) 10,200 dlh 11,700 21,900 dlh Using a single plantwide rate, the factory overhead alloca Oa. $15.25 Ob. $151.65 Oc. $152.50 d. $244.00 Product A 6 dlh 4 10 dlh ed per unit B 10 dlh 6 16 dlh Product B is
Saratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in its Purchasing Department to better understand how Purchasing Department labor costs are consumed by individual jobs. To aid the study, the company provided the following data regarding its Purchasing Department and three of its many jobs: Number of employees Average salary per employee 11 $ 27,000 Weeks of employment per year Hours worked per week 52 40 Practical capacity percentage 85% Requisition Minutes per unit of the activity Processing 15 Bid Evaluation Inspection 45 30 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 6 3 2 4 3 5 Number of inspections 7 3 7 Now assume that Saratoga Company would like to answer the following "what if" question using its time-driven activity-based costing system: Assuming our estimated activity demands for all jobs in the next period will be as shown below, how will this affect our job…
Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Overhead Direct LaborHours (dlh) Product A B Painting Dept. $248,000 10,000 dlh 16 dlh 4 dlh Finishing Dept. 72,000 10,000 4 16 Totals $320,000 20,000 dlh 20 dlh 20 dlh Using a single plantwide rate, determine the overhead rate per unit for Blue Ridge Marketing Inc.'s Product B.