S [The following information applies to the questions displayed below.] Hosmer Industries provides the following information about resources and usage: Resources used Materials Power Setups Purchasing Client assistance Supervision Facility cost Resources supplied Materials Power Setups Purchasing Client assistance Supervision Facility cost Unused Resources Capacity $ 6,600 3,924 2,160 4,680 18, 600 8,520 7,080 $352,200 47,988 59,076 62, 280 38,520 74,568 128, 040 Required: a. Compute the cost driver rate for each resource. Cost Driver Volume 6,400 pounds 272 hours 62 setups 64 purchase orders. 40 inquiries 256 labor-hours 3,360 square meters

S [The following information applies to the questions displayed below.] Hosmer Industries provides the following information about resources and usage: Resources used Materials Power Setups Purchasing Client assistance Supervision Facility cost Resources supplied Materials Power Setups Purchasing Client assistance Supervision Facility cost Unused Resources Capacity $ 6,600 3,924 2,160 4,680 18, 600 8,520 7,080 $352,200 47,988 59,076 62, 280 38,520 74,568 128, 040 Required: a. Compute the cost driver rate for each resource. Cost Driver Volume 6,400 pounds 272 hours 62 setups 64 purchase orders. 40 inquiries 256 labor-hours 3,360 square meters

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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2. Based on your response in part (1), determine the total costs allocated from each support department to each production department using the sequential method. Maintenance Molding Assembly Department Department Department Personnel Department cost allocation $ 1,500 X 24 X Maintenance Department cost allocation$ 7,740 3. Which allocation method is usually the most accurate? a. Direct method. b. Reciprocal method. c. Sequential method. d. None of the above. What is a potential disadvantage of the reciprocal method? a. It is the most complex method of cost allocation. b. Both fixed and variable costs are allocated based on the computed cost base. c. It considers the support department cost as its own department cost. d. All the above. a
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(Appendix 4B) Sequential Method of Support Department Cost Allocation Stevenson Company is divided into two operating divisions: Battery and Small Motors. The company allocates power and general factory costs to each operating division using the sequential method. General Factory is allocated first in the sequential method for the company. Support department cost allocations using the sequential method are based on the following data: Support Departments Operating Divisions Power General Factory Battery Small Motors Overhead costs $160,000 $430,000 $163,000 $84,600 Machine hours 2,000 2,000 7,000 1,000 Square footage 1,000 1,500 5,000 15,000 Direct labor hours 18,000 60,000 Required: 1. Calculate the allocation ratios for Power and General Factory. (Note: Carry these calculations out to four decimal places.) Allocation ratios for General Factory Power Battery Small Motors Allocation ratios for Power Battery Small Motors…
Fans Company has two service departments - product design and engineering support, and two production departments - assembly and finishing. The distribution of each service department's efforts to the other departments is shown below: SERVICE DEPARTMENT Product Design Engineering Support Product Design Engineering Support Assembly Finishing Multiple Choice O The direct operating costs of the departments (including both variable and fixed costs) were as follows: $1.057.333. O $1,970,000. O $712,667. O The total cost accumulated in the finishing department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333 %, and round all dollar amounts to the nearest whole dollar assume that the engineering support department goes first): Design 0% 20% $664,792. $980,208. SERVICES PROVIDED TO $ 180,000 $ 160,000 $570,000 $ 860,000 Support 10% 0% Assembly 30% 45% Finishing 60% 35%
Three Rivers Inc. provides cable TV and Internet service to the local community. The activities and activity costs of Three Rivers are identified as follows: Question Content Areaa. Identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. Quality Control Activities Activity Cost Quality Cost Classification Value-Added/Non-Value-AddedClassificationBilling error correction $42,800 External failure Non-value-addedCable signal testing 117,300 Appraisal Non-value-addedReinstalling service (installed incorrectly the first time) 92,000 Internal failure Non-value-addedRepairing satellite equipment 20,700 Internal failure Non-value-addedRepairing underground cable connections to the customer 27,800 Internal failure Non-value-addedReplacing old technology cable with higher quality cable 142,000 Appraisal Value-addedReplacing old technology signal switches…
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ABC Company has an ABC system with three pools: Total cost in cost pool Activity Machine setups Customer service Maintenance $18,500 $5,000 Cost Driver $29,000 #setups O $9,000 #orders not enough information machine- hours $13,000 $6,000 $10,000 Compute total capacity costs allocated to product X. Activity volume (#cost driver units) Product X Product Y Total 45 15 25 20 5 25 65 20 50
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