LOVE Limited operates activity based costing and activity based budgeting systems.The following information has been provided in respect of three separate production departments: Dept. 1Dept. 2Dept.3TotalBudgeted production units20 00010 00015 00045 000number of repair hours6 0001 4005 20012 600number of orders issued50010008002 300Machine hours400 000300 000200 000900 000Production overheads by Cost pool N$Machining1 755 000Stores632 500Quality assurance405 000Maintenance378 000Prepare a statement showing the total overhead cost:-(i) for each production department and(ii) per unit, within each department

One of the effective and prevailing costing methods is ABC. It is a method of costing that is used…

Answered: Prepare a statement showing the total…

Prepare a statement showing the total overhead cost:- (i) for each production department and (ii) per unit, within each department

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 23E: Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating...

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Refer to the data in Exercise 7.22. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the costs of the support departments using the sequential method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Cynthia Rogers, the cost accountant for Sanford Manufacturing, is preparing a management report that must include an allocation of overhead. The budgeted overhead for each department and the data for one job are as follows: Using the departmental overhead application rates, and allocating overhead on the basis of direct labor hours, overhead applied to Job 231 in the Tooling Department would be: a. 44.00. b. 197.50. c. 241.50. d. 501.00.
Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: Budgeted Activity Activity Budgeted Cost Activity Cost Driver Product A Product B Product C $ 70,000 $ 45,000 $ 82,000 Square feet Units inspected Activity 1 6,000 9,000 20,000 Activity 2 Activity 3 7,000 15,000 8,000 Setups 2,500 1,000 1,625 What are the activity rates for the three activities under activity-based costing? Multiple Choice (1) $2.00 per square foot; (2) $3.00 per unit; (3) $3.50 per setup. (1) $3.50 per square foot; (2) $1.50 per unit; (3) $32,80 per setup. (1) $3.50 per square foot; (2) $3.00 per unit; (3) $16.00 per setup. (1) $2.00 per square foot: (2) $1.50 per unit; (3) $16.00 per setup.
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: BUDGETED ACTIVITY Budgeted Cost Product A $70,000 $45,000 $82,000 Activity Cost Pool Activity 1 Activity 2 Activity 3 How much overhead will be assigned to Product B using activity-based costing? Product B 9,000 15,000 1,000 6,000 7,000 2,500 Product C 20,000 8,000 1,625
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: Budgeted Activity Budgeted Activity Cost Pool Cost Product A Product B Product C Activity 1 $70,000 6,000 9,000 Activity 2 $45,000 7,000 15,000 Activity 3 $82,000 2,500 1,000 What are the activity rates for the three activities under activity based costing? O (1) $2.00; (2) $3.00; (3) $3.50. O (1) $3.50; (2) $1.50; (3) $32,80. O (1) $3.50; (2) $3.00; (3) $16.00. O (1) $2.00; (2) $1.50; (3) $16.00. O (1) $2.00; (2) $1.50; (3) $32.80. Question 9 F2 F7 -0- 2 F3 O+ # 3 F4 BJ LA $ 4 F5 N F6 % 5 6 20,000 8,000 1,625 F8 $ & 7 F9
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: Budgeted Activity Activity Cost Pool Budgeted Cost Product A Product B Product C Activity 1 $ 87,000 7,700 10,700 21,700 Activity 2 $ 62,000 8,700 16,700 9,700 Activity 3 $ 116,000 4,200 2,700 3,325 How much overhead will be assigned to Product B using activity-based costing?
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: Budgeted Activity Activity Cost Pool Activity 1 Activity 2 Activity 3 Budgeted Cost Product A Product B 6,300 7,300 2,800 Product C $73,000 $48,000 $88,000 20,300 8,300 1,925 9,300 15,300 1,300 How much overhead will be assigned to Product B using activity-based costing?
Extreme Manufacturing Company provides the following ABC costing information:ActivitiesTotal CostsActivity - cost driversAccount inquiry$390, 00013, 000 hoursAccount billing$ 275,0005, 000, 000 linesAccount verification accounts$130, 50060, 000 accountsCorrespondence letters $22, 0004, 000 lettersTotal costs$817,500 The above activities are used by Departments A and B (among other departments) as follows: Department ADepartment BAccount inquiry hours2, 500 hours4, 000 hoursAccount billing lines800, 000 lines650, 000 linesAccount verification accounts9, 000 accounts7, 000 accountsCorrespondence letters2, 000 letters2, 400 letters How much of correspondence costs will be assigned to Department A ? Question 12 Select one:A. $49, 500B. $11, 242C. $11,000D. $22,000
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: Budgeted Activity Activity Cost PoolBudgeted Cost Product AProduct BProduct Activity 1 7,500 10,500 21,500 Activity 2 8,500 16,500 9,500 Activity 3 4,000 2,500 3,125 How much overhead will be assigned to Product B using activity-based costing? 85,000 60,000 112,000
Deemer Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Equipment expense Indirect labor Distribution of Resource Consumption Across Activity Cost Pools: Equipment expense Indirect labor $ 73,000 $ 6,000 Product F6 Product X0 Total Processing 0.60 0.40 Activity Cost Pools Supervising 0.20 0.20 Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: Activity: MHS (Processing) 1,000 9,000 10,000 Batches (Supervising) Other 0.20 0.40 600 400 1,000 How much overhead…
Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five separate activity pools. The budgeted activity cost and activity base data by product are as follows: Procurement Scheduling Materials handling Product development Production Disk drives Tape drives Wire drives Activity Cost $379,200 245,800 402,900 728,700 1,528,900 Number of Purchase Orders 3,890 1,700 13,000 Activity Base Number of purchase orders Number of production orders Number of moves Number of engineering changes Machine hours c. $148.42 per machine hour O d. $20.4 per machine hour Number of Number Number of of Moves Production Orders 280 155 870 1,330 500 3,600 Engineering Changes 13 3 20 Machine Hours 1,500 8,400 10,700 The activity rate (rounded to the nearest cent) for the production cost pool is O a. $74.2 per machine hour O b. $74.22 per machine hour O Number of Units 2,100 3,900 3,000

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	Dept. 1	Dept. 2	Dept.3	Total
Budgeted production units	20 000	10 000	15 000	45 000
number of repair hours	6 000	1 400	5 200	12 600
number of orders issued	500	1000	800	2 300
Machine hours	400 000	300 000	200 000	900 000

	N$
Machining	1 755 000
Stores	632 500
Quality assurance	405 000
Maintenance	378 000