Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC: Cost Pool Cost Driver Estimated Overhead Wholesale Retail Ordering Number of orders $120,000 $180,000 $60,000 Machine setups Number of setups $85,000 $200,000 $140,000 Inspection Number of inspections $75,000 $60,000 $15,000 What would be the predetermined rate for each cost pool? a. Ordering b. Machine setups c. Inspection

Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC: Cost Pool Cost Driver Estimated Overhead Wholesale Retail Ordering Number of orders $120,000 $180,000 $60,000 Machine setups Number of setups $85,000 $200,000 $140,000 Inspection Number of inspections $75,000 $60,000 $15,000 What would be the predetermined rate for each cost pool? a. Ordering b. Machine setups c. Inspection

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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Required information [The following information applies to the questions displayed below.] Benton Corporation manufactures computer microphones, which come in two models: Standard and Premium. Data for a representative quarter for the two models follow: Units produced Production runs per quarter Direct materials cost per unit Direct labor cost per unit Standard 11,600 Premium 2,900 50 $ 30 50 25 $ 64 75 Manufacturing overhead in the plant has three main functions: supervision, setup labor, and incoming material inspection. Data on manufacturing overhead for a representative quarter follow: Supervision Setup labor Incoming inspection Total overhead $ 239,250 278,400 200,100 $ 717,750 Required: a. Compute the unit costs for the two products, Standard and Premium, using the current costing system at Benton (using direct labor costs as the allocation basis for overhead). b. Compute the unit costs for the two products, Standard and Premium, using the proposed ABC system at Benton. Note: For…
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The controller of New Wave Sounds Inc. prepared the following product profitability report for management, using activity-based costing methods for allocating both the factory overhead and the marketing expenses. As such, the controller has confidence in the accuracy of this report. Home Theater Wireless Wireless Speakers Speakers Headphones Total $ 1,500,000 (1,050,000) $ 450,000 (600,000) $ (150,000) $ 900,000 (810,000) $ 90,000 (72,000) $ 18,000 $ 3,600,000 (2,580,000) $ 1,020,000 (792,000) $ 228,000 Sales $1,200,000 Cost of goods sold Gross profit (720,000) $ 480,000 (120,000) $ 360,000 Marketing expenses Operating income In addition, the controller interviewed the vice president of marketing, who provided the following insight into the company's three products: The home theater speakers are an older product that is highly recognized in the marketplace. - The wireless speakers are a new product that was just recently launched. - The wireless headphones are a new technology that has…
Olive Company makes dessert pies for national convenient food chains. Olive Company is considering using ABC costing and has the following activity cost pools and information available: Activities Estimated Overhead Costs Estimated Activity Material handling measured by batches $251,000 2,000 batches Mixing measured by batches $110,000 3,520 batches Packaging measured by units $84,000 2,100,000 units Maintenance measured by # of setups $15,000 260 setups Olive Company currently uses a plantwide overhead rate based on total estimated machine hours of 100,000 hours. Based on their estimates for ABC costing, compute the allocated cost for all overhead costs for Job 607 using the following information about the job. # of units in the job = 4,900 # of units in each batch = 980 # of setups required to complete the job = 1 # of machine hours = 220
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Required information [The following information applies to the questions displayed below.] Benton Corporation manufactures computer microphones, which come in two models: Standard and Premium. Data for a representative quarter for the two models follow: Units produced Standard 10,000 Premium 2,500 Production runs per quarter 50 25 Direct materials cost per unit $ 30 $ 64 Direct labor cost per unit 50 75 Manufacturing overhead in the plant has three main functions: supervision, setup labor, and incoming material inspection. Data on manufacturing overhead for a representative quarter follow: Supervision Setup labor Incoming inspection Total overhead $ 206,250 240,000 172,500 $ 618,750 Required: a. Compute the unit costs for the two products, Standard and Premium, using the current costing system at Benton (using direct labor costs as the allocation basis for overhead). b. Compute the unit costs for the two products, Standard and Premium, using the proposed ABC system at Benton. Note: For…
Multiple Choice $6.49 $5.63 $3.92 $5.20
Colby Company makes cases for cell phones of all sizes and types for sale through specialty retailers. The company makes a standard model for the most recent iPhone as well as a deluxe model. Management has designed an ABC system with the following activity cost pools and activity rates for these models: Activity Rates Activity Cost Pool Supporting manufacturing $2 per direct labour-hour $27 per order Order processing Customer service. $68 per customer Management would like an analysis of the profitability of a particular customer, Cell City, which has ordered the following products over the last 12 months: Standard Model Deluxe Model 95 Number of cases 270 Number of orders Direct labour-hours per case. 5 0.25 47 2 0.40 67 Selling price per case $ $ $ 27 Direct materials cost per case $ 24 The company's direct labour rate is $28 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City. Customer margin
Hayward Industries manufactures dining chairs and tables. The following information is available: Machine setups Inspections Dining Chairs Tables Total Overhead Cost 200 600 $48,000 250 470 $72,000 2,600 2,400 Labor hours Hayward is considering switching from Traditional Costing based on labor hours to activity-based costing. Assign total overhead costs to Tables using Activity Based Costing. $120,000 $62,400 $83,000 $37,000 $57,600

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Cost Pool	Cost Driver	Estimated Overhead	Wholesale	Retail
Ordering	Number of orders	$120,000	$180,000	$60,000
Machine setups	Number of setups	$85,000	$200,000	$140,000
Inspection	Number of inspections	$75,000	$60,000	$15,000