Required information [The following information applies to the questions displayed below.] Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Equipment setup Packaging and shipping Activity Drivers Direct material cost Costs $ 538,560 3,005,600 1,074,400 571,200 Units shipped Machine-hours Production runs
Required information [The following information applies to the questions displayed below.] Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Equipment setup Packaging and shipping Activity Drivers Direct material cost Costs $ 538,560 3,005,600 1,074,400 571,200 Units shipped Machine-hours Production runs
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Please don't give image based answer..thanku
Transcribed Image Text:Req A1
Compute the totals of the cost driver rates shown below.
Note: Round "Packaging and shipping" answer to 2 decimal places.
Material inspection
Production
Engineering
Equipment setup
Packaging and shipping
Req A1
Req A2
Direct material costs
Direct labor cost
Overhead:
Req A2
Total costs
Number of units
Unit cost
What unit product costs will be reported for the two products if the revised ABC system is used?
Note: Do not round intermediate calculations.
Material inspection
Production
Engineering
Equipment setup
Packaging and shipping
538,560 % of material dollars
per hour
per setup
per setup
per unit
LC-20
0
< Req A1
0
LC-50
< Req A1
0
Req A2 >
0
Reg A2 >
![Required information
[The following information applies to the questions displayed below.]
Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the
company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and
LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products.
The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing
systems as a way to ensure that managers had the best information available for decision making. However, rather than
update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the
Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees
was formed to propose an ABC system and compare the product costs with those reported by the current system. Based
on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company.
The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a
great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following
pools and drivers. The costs were based on the forecasts for the coming year.
Cost Pools
Material inspection
Assembly
Activity Drivers
Direct material cost
Machine-hours
Production runs
Units shipped
Equipment setup
Packaging and shipping
Data for production of the two products at the Bayside plant for the coming year of operations follows:
Products
Total direct material costs
Total direct labor costs
Total machine-hours
Total number of production runs
Number of units produced and shipped
All direct labor at the Bayside plant is paid $35 per hour.
Cost Pools
Production setup
Fabrication
Certification
Quality assurance
Costs
$ 538,560
3,005,600
1,074,400
571,200
Kensington Electronics (KE) is a wholly owned subsidiary of CWD Enterprises, a global manufacturing company. Unlike most CWD
companies, KE uses a traditional costing system to compute product costs. After the last review by CWD staff, the financial
management at KE decided to consider switching to activity-based costing. The controller's staff at KE has identified classified
manufacturing overhead costs for the next quarter into four overhead cost pools. They also identified an appropriate cost driver for
each pool.
Total direct material costs
Total direct labor costs
LC-20
$734,400
$ 571,200
125,290
102
326,400
Costs
Activity Drivers
$538,560 Production runs
3,005,600 Machine-hours
1,074,400
Certificates
Test-hours
571,200
Total machine-hours
Total test hours
Total number of production runs
The company manufactures two basic products, which are components of navigation systems. The products are the NAV1 and NAV1-
AV. Although similar, the NAV1-AV uses upgraded materials. In addition, the NAVI-AV needs to be certified for use in aircraft
navigational equipment. All units produced are tested, but the tests are more extensive for the NAV1-AV model.
The following are data for production for the next quarter:
Number of certificates
Number of units produced and shipped
Penuired-
LC-50
$ 244,800
$ 285,600
62,560
68
81,600
Products
NAV1
$734,400
$ 571,200
125,290
102
326,400
35
751,400
NAV1-AV
$ 244,800
$ 285,600
62,560
68
81,600
2,254,200
856,800](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd4fb3069-3205-4768-a97a-1b3924eeeda6%2Ff1463b09-3cb3-4f2b-961b-2a514581086c%2Fc5jb6qs_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the
company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and
LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products.
The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing
systems as a way to ensure that managers had the best information available for decision making. However, rather than
update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the
Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees
was formed to propose an ABC system and compare the product costs with those reported by the current system. Based
on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company.
The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a
great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following
pools and drivers. The costs were based on the forecasts for the coming year.
Cost Pools
Material inspection
Assembly
Activity Drivers
Direct material cost
Machine-hours
Production runs
Units shipped
Equipment setup
Packaging and shipping
Data for production of the two products at the Bayside plant for the coming year of operations follows:
Products
Total direct material costs
Total direct labor costs
Total machine-hours
Total number of production runs
Number of units produced and shipped
All direct labor at the Bayside plant is paid $35 per hour.
Cost Pools
Production setup
Fabrication
Certification
Quality assurance
Costs
$ 538,560
3,005,600
1,074,400
571,200
Kensington Electronics (KE) is a wholly owned subsidiary of CWD Enterprises, a global manufacturing company. Unlike most CWD
companies, KE uses a traditional costing system to compute product costs. After the last review by CWD staff, the financial
management at KE decided to consider switching to activity-based costing. The controller's staff at KE has identified classified
manufacturing overhead costs for the next quarter into four overhead cost pools. They also identified an appropriate cost driver for
each pool.
Total direct material costs
Total direct labor costs
LC-20
$734,400
$ 571,200
125,290
102
326,400
Costs
Activity Drivers
$538,560 Production runs
3,005,600 Machine-hours
1,074,400
Certificates
Test-hours
571,200
Total machine-hours
Total test hours
Total number of production runs
The company manufactures two basic products, which are components of navigation systems. The products are the NAV1 and NAV1-
AV. Although similar, the NAV1-AV uses upgraded materials. In addition, the NAVI-AV needs to be certified for use in aircraft
navigational equipment. All units produced are tested, but the tests are more extensive for the NAV1-AV model.
The following are data for production for the next quarter:
Number of certificates
Number of units produced and shipped
Penuired-
LC-50
$ 244,800
$ 285,600
62,560
68
81,600
Products
NAV1
$734,400
$ 571,200
125,290
102
326,400
35
751,400
NAV1-AV
$ 244,800
$ 285,600
62,560
68
81,600
2,254,200
856,800
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education