phases. For some businesses, particularly Total life-cycle costing normally starts from the premise that the life cycle of a product or service has those engaged in an advanced manufacturing environment, a very high proportion (perhaps as much as 80%) of the total costs incurred over the life of a particular product are either incurred, or committed, at the phase. pre-production production post-production decommissioning

phases. For some businesses, particularly Total life-cycle costing normally starts from the premise that the life cycle of a product or service has those engaged in an advanced manufacturing environment, a very high proportion (perhaps as much as 80%) of the total costs incurred over the life of a particular product are either incurred, or committed, at the phase. pre-production production post-production decommissioning

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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Assume a company manufactures only two products-14,000 units of Product G and 6,000 units of Product H. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products G and H: Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Activity Measure Machine-hours Number of setups Number of products Product G Product H 9,000 50 1 6,000 150 1 Estimated Overhead Cost Expected Activity 15,000 MH 200 Setups $ 300,000 $ 150,000 $ 78,000 2 Products Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product H?
3. Within a department of a factory there are two processes which produce the finished product of that department. Raw materials are introduced initially at the commencement of Process I and further raw materials are added at the end of Process II. Conversion costs (direct labour plus factory overhead) accrue uniformly throughout both the processes. The flow of the product is continuous, the completed output of Process I passes immediately into Process II and the completed output of Process II passes immediately into the Finished Goods Warehouse. Using the table on the next page, use the FIFO method and state: a. the number of completed units transferred to Finished Goods Store b. the average cost of each such unit.
! Required information [The following information applies to the questions displayed below.] Victory Company uses weighted average process costing. The company has two production processes. Conversion cost is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the first process follows. Beginning work in process inventory Units started this period Units completed and transferred out Ending work in process inventory Beginning work in process inventory Direct materials Conversion Costs added this period Direct materials Conversion Total costs to account for Cost per equivalent unit of production Units Total costs + Equivalent units of production (from part 1) Cost per equivalent unit of production 67,000 893,000 770,000 190,000 $ 499,200 88,400 3,340,800 1,679,600 Direct Materials Percent Complete 100% 100% Costs EUP Conversion Percent Complete 80% $ 587,600 2. Compute cost per equivalent unit of production…
When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a higher unit cost resulting for the high volume products. Please explain (True or False) thoroughly.
Which of the following statements regarding a process costing system is false? Multiple Choice Use of a process costing system would be appropriate for a company that manufactures luxury yachts. Unit costs are computed for each department. The number of equivalent units for a period takes into account the stage of completion of ending work in pro Unit cost is determined for a designated period of time.
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Dengo Company makes a trail mix in two departments: Roasting and Blending. Direct materials are added at the beginning of each process, and conversion costs are added evenly throughout each process. The company uses the FIFO method of process costing. October data for the Roasting department follow. Beginning work in process inventory Units started and completed Units completed and transferred out Ending work in process inventory Beginning work in process inventory Costs added this period Direct materials. Conversion Total costs to account for Units 4,400 20, 600 25,000 3,800 $314, 760 1,374,948 Direct Materials Conversion Percent Percent Complete Complete 100% 30% 100% $ 124,790 1,689, 708 $ 1,814, 498 70%
FIFO Method, Two-Department Analysis Muskoge Company uses a process-costing system. The company manufactures a product that is processed in two departments: Molding and Assembly. In the Molding Department, direct materials are added at the beginning of the process; in the Assembly Department, additional direct materials are added at the end of the process. In both departments, conversion costs are incurred uniformly throughout the process. As work is completed, it is transferred out. The following table summarizes the production activity and costs for February: Molding Assembly Beginning inventories: Physical units 10,000 8,000 Costs: Transferred in — $45,300 Direct materials $22,000 — Conversion costs $13,800 $16,900 Current production: Units started 25,000 ? Units transferred out 30,000 35,000 Costs: Transferred in — ? Direct materials…