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: Estimated Cost Pool Cost Driver Overhead Wholesale Retail Ordering Number of Orders $94,500 170,000 40,000 Machine Setups Number of Setups 92,500 210,000 160,000 Inspection Number of Inspections 55,000 40,000 15,000 What would be the predetermined rate for each cost pool? Round "Rate" answers to two decimal places. Estimated Total Cost Pool Cost Driver Overhead Activity Rate Ordering Number of Orders $94,500 per order Machine Number of Setups 92,500 $ per setup Setups Number of per Inspection 55,000 Inspections 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: Estimated Cost Pool Cost Driver Overhead Wholesale Retail Ordering Number of Orders $94,500 170,000 40,000 Machine Setups Number of Setups 92,500 210,000 160,000 Inspection Number of Inspections 55,000 40,000 15,000 What would be the predetermined rate for each cost pool? Round "Rate" answers to two decimal places. Estimated Total Cost Pool Cost Driver Overhead Activity Rate Ordering Number of Orders $94,500 per order Machine Number of Setups 92,500 $ per setup Setups Number of per Inspection 55,000 Inspections 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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The managerial accountant at Sunny Manufacturing needs to determine how many costs are fixed costs and how many costs are variable costs in the organization. The managerial accountant reported the following information: Use the high-low method to determine the cost equation and use machine hours as the base for a cost driver in the analysis. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). Month Machine-Hours Total Cost January 1,800 $21,500 February 2,900 $23,200 March 1,000 $19,750 April 2,400 $21,000 May 3,400 $23,900
1. SIP Inc. (SIP) is plastic injection molding company specializing in front-end grilles. Bilchew Numbers wants to look at using an activity-based costing system. For 2021, he estimated overhead costs of $12,560,000 to be allocated using an activity-based costing system (see the table below). Bilchew also estimated that direct labour will be paid at the rate of $15 per hour. Cost Driver Activity Cost Pool Estimated Cost Total Quantity of Allocation Base (allocation base) Indirect materials $ 1,450,000 Direct materials $6,590,910 Indirect labour and 2,000,000 Direct labour 100,000 hours supervision Utilities 3,598,000 Power 20,000 kilowatt-hours (kWh) consumption Inspection 4,200,000 Inspection 15,000 inspections Depreciation 1,312,000 Machine usage 160,000 machine-hours $12,560,000 During January 2021, Bilchew worked on two jobs, which consumed the following resources: Job 2021-A1 Job 2021-A2 Direct materials cost $ 6,500 $ 22,000 Direct labour cost $42,000 $165,000 Machine-hours 1,800…
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Maxwell Company makes treadmills. The company controller wants to calculate the fixed and variable costs associated with the janitorial costs incurred in the factory using the regression method. Data for the past four months were collected. Month Janitorial costs Machine hours September $11,000 575 October 11,400 610 November 10,200 510 December 10,725 550 What would Maxwell Company's estimate of total janitorial cost be at a level of 600 machine hours? Round the variable rate and fixed cost to the nearest cent.
Explain the following terms mean to include the major features, rights, ánd restrictíons of eăch. a) Common stock b) Preferred stock c) Par value d) Stated value e) Paid in capital in excess of par value f) Preempțive right g) Waterėd stock h) Secret reserves to include why firm create them
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Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $490,440 Number of setups 610 Ordering costs 313,500 Number of orders 16,500 Machine costs 917,700 Machine hours 43,700 Receiving 382,200 Receiving hours 9,800 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $610,000 $766,000 Direct labor 451,000 499,000 Units completed 15,500 7,000 Direct labor hours 6,400 2,300 Number of setups 360 250 Number of orders 5,400 11,100 Machine hours 24,900 18,800 Receiving hours 2,700 7,100 The company's normal activity is 8,700 direct labor hours. Required: 1. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final…
One of Waterway Company's activity cost pools is machine setups with estimated overhead of $240000. Waterway produces sparklers (360 setups) and lighters (640 setups). How much of the machine setup cost pool should be assigned to sparklers? O $120000 $153600 O $86400 $240000
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IKIT company produces and sells recliner chairs. IKIT uses an absorption product costing system, which means that both variable and fixed overhead are included in the product cost. Cost estimates for a recliner chair and expected production volume for next year are as follows: Per Unit Total Direct materials $40Direct labour $20Variable manufacturing overhead $14Variable selling and administrative expenses $15Fixed selling and administrative expenses $380,000Fixed manufacturing overhead $460,000Expected volume of production (units): 42,000The company’s owners expect to earn a rate of return (ROI) of 30% on their invested assets of $2,500,000. a)a. IKIT currently uses the cost-plus pricing method. Compute the mark-up percentage and target selling price that will allow IKIT to earn its desired ROI of 30% for next year. b) Based on a recent marketing research, the senior management has an optimistic sales expectation of 50,000 units and predicts to earn a higher ROI of 35%. Compute new…
Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Harbour has monthly overhead of $168,340, which is divided into the following activity pools: Setup costs Quality control Maintenance Total Number of setups Number of inspections Number of machine hours $86,400 54,940 27,000 $ 168,340 The company also has compiled the following information about the chosen cost drivers: Home 37 340 1,600 Required 1 Home Required 2 Required 3 $ 41 16 360 770 units Work 71 330 1,100 Home Model Work Model Total Overhead Cost Required: 1. Suppose Harbour uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. 2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system. 3. Calculate Harbour's gross margin per…
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…