Q2. (Garrison) Ferris Corporation makes a single product-a fire-resistantcommercial filing cabinet-that it sells to office furniture distributors. Thecompany has a simple ABC system that it uses for internal decision making.The company has two overhead departments whose costs are listed on thefollowings:Manufacturing overhead$500,000300,000Selling and administrative overheadTotal overhead costs . .$800,000The company's ABC system has the following activity cost pools andactivity measures Activity Cost PoolActivity MeasureAssembling unitsNumber of unitsProcessing ordersNumber of ordersNumber of customersSupporting customersOtherNot applicableCosts assigned to the "Other" activity cost pool have no activity measure;they consist of the costs of unused capacity and organization-sustainingcosts neither of which are assigned to orders, customers, or the product.Ferris Corporation distributes the costs of manufacturing overhead and sellingand administrative overhead to the activity cost pools based on employeeinterviews, the results of which are reported below:Distribution of Resource Consumption Across Activity Cost PoolsAssembling ProcessingUnitsSupporting Other TotalOrdersCustomersManufacturing overhead50%35%5%10% 100%Selling and administrative10%45%25%20% 100%overheadTotal activity1,000250100unitsorderscustomersRequired:1. Compute activity rates for the activity cost pools2. OfficeMart is one of Ferris Corporation's customers. Last year, OfficeMartordered filing cabinets four different times. OfficeMart ordered a total of 80filing cabinets during the year. Construct a table showing the overhead costsattributable to OfficeMart.3. The selling price of a filing cabinet is $595. The cost of direct materials is$180 per filing cabinet, and direct labor is $50 per filing cabinet. What is thecustomer margin of OfficeMart?

Variable Costing Variable costs are costs incurred within the total cost that do not include all…

Q2. (Garrison) Ferris Corporation makes a single product-a fire-resistant commercial filing cabinet-that it sells to office furniture distributors. The company has a simple ABC system that it uses for internal decision making. The company has two overhead departments whose costs are listed on the followings: Manufacturing overhead $500,000 300,000 Selling and administrative overhead Total overhead costs $800,000 The company's ABC system has the following activity cost pools and activity measures

Q2. (Garrison) Ferris Corporation makes a single product-a fire-resistant commercial filing cabinet-that it sells to office furniture distributors. The company has a simple ABC system that it uses for internal decision making. The company has two overhead departments whose costs are listed on the followings: Manufacturing overhead $500,000 300,000 Selling and administrative overhead Total overhead costs $800,000 The company's ABC system has the following activity cost pools and activity measures

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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E4.1 (LO 1, 2), AP Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activitybased costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining (machine hours) and machine setup (number of setups). The total estimated machine hours is 2,000, and the total estimated number of setups is 500. Presented below is information related to each product's use of cost drivers. Direct labor costs Machine hours Number of setups Standard $50,000 1,000 100 Custom $100,000 1,000 400 Total estimated overhead costs are $240,000. Overhead cost allocated to the machining activity cost pool is $140,000, and $100,000 is allocated to the machine setup activity cost pool. Instructions a. Compute the overhead rate using the traditional (plantwide) approach. b. Compute the overhead rates using the activity-based costing…
[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 Supervision Setup labor Incoming inspection Total overhead 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: Standard 10,400 50 $ 30 50 $ 214,500 249,600 179,400 $ 643,500 a. Overhead rate b. Supervision b. Setup labor b. Incoming inspection Premium 2,600 25 $ 64 75 Required: a. Benton currently applies overhead on the basis of direct labor cost. What is the predetermined overhead rate for the quarter? b. The CFO and the plant controller at Benton are thinking of adopting an ABC system. They have tentatively chosen the…
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