Simplifying the ABC System: Equally Accurate Reduced ABC Systems Selected activities and other information are provided for Patterson Company for its most recent year of operations. Activity Driver Quantity Wafer A Wafer B 7. Inserting dies Number of dies 2,200,000 0.7 0.3 8. Purchasing materials Number of purchase orders 1,900 0.2 0.8 1. Developing test programs Engineering hours 11,500 0.25 0.75 3. Testing products Test hours 20,000 0.6 0.4 ABC assignments $155,000 $155,000 Total overhead cost $310,000 Required: 1. Form reduced system cost pools for activities 7 and 8. Do not round interim calculations. Round your final answers to the nearest dollar. Inserting dies cost pool $ 186,000 Purchasing cost pool $ 124,000 2. Assign the costs of the reduced system cost pools to Wafer A and Wafer B. Do not round interim calculations. Round your final answers to the nearest dollar. Wafer A $ 155,000 Wafer B $ 155,000 3. What if the two activities were 1 and 3? Repeat Requirements 1 and 2. Form reduced system cost pools for activities 1 and 3. Do not round interim calculations. Round your final answers to the nearest dollar. Developing test programs cost pool $ Testing products cost pool $ I came up with 88,567 for test programs and 221,433 for testing products, and was told this was wrong. Please let me know what I did wrong. Assign the costs of the reduced system cost pools to Wafer A and Wafer B. Wafer A $ 155,000 Wafer B $ 155,000
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.
Simplifying the ABC System: Equally Accurate Reduced ABC Systems
Selected activities and other information are provided for Patterson Company for its most recent year of operations.
| Activity | Driver | Quantity | Wafer A | Wafer B | ||||
| 7. Inserting dies | Number of dies | 2,200,000 | 0.7 | 0.3 | ||||
| 8. Purchasing materials | Number of purchase orders |
1,900 | 0.2 | 0.8 | ||||
| 1. Developing test programs | Engineering hours | 11,500 | 0.25 | 0.75 | ||||
| 3. Testing products | Test hours | 20,000 | 0.6 | 0.4 | ||||
| ABC assignments | $155,000 | $155,000 | ||||||
| Total |
$310,000 |
Required:
1. Form reduced system cost pools for activities 7 and 8. Do not round interim calculations. Round your final answers to the nearest dollar.
| Inserting dies cost pool | $ 186,000 |
| Purchasing cost pool | $ 124,000 |
2. Assign the costs of the reduced system cost pools to Wafer A and Wafer B. Do not round interim calculations. Round your final answers to the nearest dollar.
| Wafer A | $ 155,000 |
| Wafer B | $ 155,000 |
3. What if the two activities were 1 and 3? Repeat Requirements 1 and 2.
Form reduced system cost pools for activities 1 and 3.
Do not round interim calculations. Round your final answers to the nearest dollar.
| Developing test programs cost pool | $ |
| Testing products cost pool | $ |
I came up with 88,567 for test programs and 221,433 for testing products, and was told this was wrong. Please let me know what I did wrong.
Assign the costs of the reduced system cost pools to Wafer A and Wafer B.
| Wafer A | $ 155,000 |
| Wafer B | $ 155,000 |
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