The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers. Budgeted Level for Cost Driver 110 30,000 Activity Cost Pool Machine setups Material handling Hazardous waste control Quality control Other overhead costs Total Budgeted Overhead Cost $ 330,000 90,000 Hazardous materials Inspections Machine hours 70,000 150,000 400,000 $ 1,040,000 Cost Driver Number of setups Weight of raw material Weight of hazardous chemicals used Number of inspections Machine hours An order for 5,000 boxes of medical-testing agent has the following production requirements. Machine setups Raw material 7 setups pounds 12,000 4,000 pounds pound 7,000 pound 2,000 20,000 10 inspections 500 machine hours Pool Rate $3,000 per setup $3 per pound $10 per pound $ 75 per inspection $ 20 per machine hour Required: 1. Compute the total overhead that should be assigned to the medical-testing agent order. 2. What is the overhead cost per box of testing agent? 3. Suppose Tulsa Medical Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the rate per hour. 4. Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order? a. In total. b. Per box of testing agent.
The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers. Budgeted Level for Cost Driver 110 30,000 Activity Cost Pool Machine setups Material handling Hazardous waste control Quality control Other overhead costs Total Budgeted Overhead Cost $ 330,000 90,000 Hazardous materials Inspections Machine hours 70,000 150,000 400,000 $ 1,040,000 Cost Driver Number of setups Weight of raw material Weight of hazardous chemicals used Number of inspections Machine hours An order for 5,000 boxes of medical-testing agent has the following production requirements. Machine setups Raw material 7 setups pounds 12,000 4,000 pounds pound 7,000 pound 2,000 20,000 10 inspections 500 machine hours Pool Rate $3,000 per setup $3 per pound $10 per pound $ 75 per inspection $ 20 per machine hour Required: 1. Compute the total overhead that should be assigned to the medical-testing agent order. 2. What is the overhead cost per box of testing agent? 3. Suppose Tulsa Medical Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the rate per hour. 4. Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order? a. In total. b. Per box of testing agent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers.
Budgeted Level
for Cost Driver
110
30,000
Activity Cost Pool
Machine setups
Material handling
Hazardous waste control
Quality control
Other overhead costs
Total
Budgeted
Overhead Cost
$ 330,000
90,000
Hazardous materials
Inspections
Machine hours
70,000
150,000
400,000
$ 1,040,000
Cost Driver
Number of setups
Weight of raw material
Weight of hazardous
chemicals used
Number of inspections
Machine hours
An order for 5,000 boxes of medical-testing agent has the following production requirements.
Machine setups
Raw material
7
setups
pounds
12,000
4,000 pounds
pound
7,000 pound
2,000
20,000
10 inspections
500 machine hours
Required:
1. Compute the total overhead that should be assigned to the medical-testing agent order.
2. What is the overhead cost per box of testing agent?
Pool Rate
$3,000 per setup
$3 per pound
$10 per pound
$75 per inspection
$20 per machine hour
3. Suppose Tulsa Medical Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the
rate per hour.
4. Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order?
a. In total.
b. Per box of testing agent.
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