The Shoe Factory produces two types of shoes: Walking and Running. The following budgeted information is available:WalkingRunning10,00012,000$100$150$140,000$45,000Units produced and soldPrice per unitDirect material costsDirect labor costsProduction runsMachine hours1,800Total overhead costs are $1,910,000. The firm estimates these overhead costs consist of the following activities and has selected the following cost drivers for these activities:50400$120,000$31,400150ActivityCostProduction setups$810,000$1,100,000Machine timeAssume all actual costs were equal to budgeted costs.a. What is the total cost for Walking shoes if overhead is allocated based on direct labor costs?b. What is the overhead allocation for Walking shoes if overhead is allocated using activity-based costing?c. Are the firm's total profits (including both shoe types) higher, lower, or the same if overhead is assigned using direct labor costs instead of activity-based costing? Justify your answer.Cost DriverProduction runsMachine hours

Overheads means all indirect costs being incurred in business. Under traditional costing method,…

The Shoe Factory produces two types of shoes: Walking and Running. The following budgeted information is available: Running 12,000 $150 Units produced and sold Price per unit Direct material costs Direct labor costs Walking 10,000 $100 $140,000 $45,000 Production runs Machine hours 1,800 Total overhead costs are $1,910,000. The firm estimates these overhead costs consist of the following activities and has selected the following cost drivers for these activities: 50 $120,000 $31,400 400 150 Activity Cost Production setups Production runs $810,000 $1,100,000 Machine time Machine hours Assume all actual costs were equal to budgeted costs. a. What is the total cost for Walking shoes if overhead is allocated based on direct labor costs? b. What is the overhead allocation for Walking shoes if overhead is allocated using activity-based costing? c. Are the firm's total profits (including both shoe types) higher, lower, or the same if overhead is assigned using direct labor costs instead of activity-based costing? Justify your answer. Cost Driver

The Shoe Factory produces two types of shoes: Walking and Running. The following budgeted information is available: Running 12,000 $150 Units produced and sold Price per unit Direct material costs Direct labor costs Walking 10,000 $100 $140,000 $45,000 Production runs Machine hours 1,800 Total overhead costs are $1,910,000. The firm estimates these overhead costs consist of the following activities and has selected the following cost drivers for these activities: 50 $120,000 $31,400 400 150 Activity Cost Production setups Production runs $810,000 $1,100,000 Machine time Machine hours Assume all actual costs were equal to budgeted costs. a. What is the total cost for Walking shoes if overhead is allocated based on direct labor costs? b. What is the overhead allocation for Walking shoes if overhead is allocated using activity-based costing? c. Are the firm's total profits (including both shoe types) higher, lower, or the same if overhead is assigned using direct labor costs instead of activity-based costing? Justify your answer. Cost Driver

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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Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $324,156, using 272,400 direct labor hours. The factory overhead budget for the Assembly Department is $295,263, using 61,900 direct labor hours. If a desk lamp requires 2 hours of fabrication and 5 hours of assembly, the amount of factory overhead that Kaumajet Factory will allocate to each unit of desk lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours is a.$4.77 b.$10.01 c.$70.05 d.$26.23
Challenger Factory produces two similar products - regular widgets and deluxe widgets. The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours. It is further estimated that deluxe widget production will need 3 direct labor hours for each unit and regular widget production will require 2 direct labor hours for each unit.Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to deluxe widget production if budgeted production for the period is 50,000 units and actual production for the period is 58,000 units? a.$391,500 b.$225,000 c.$261,000 d.$337,500
Adams Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials $ 5,400 Unit-level labor 6,400 Unit-level overhead 3,900 Product-level costs* 10,500 Allocated facility-level costs 28,200 *One-third of these costs can be avoided by purchasing the containers.Russo Container Company has offered to sell comparable containers to Adams for $2.80 each.Required Calculate the total relevant cost. Should Adams continue to make the containers? Adams could lease the space it currently uses in the manufacturing process. If leasing would produce $12,500 per month, calculate the total avoidable costs. Should Adams continue to make the containers?
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The manufacturing plant of Carilla Ltd. specializes in crafting specialized pieces for camival. With a monthly production capacity of 15,000 pieces, the company currently manufactures and sells 11,000 pieces per month. Typically priced at $200 per piece, the company's cost breakdown for the ongoing production level is outlined below: Variable costs that vary with number of units produced Direct materials $440,000 Direct manufacturing labor 495,000 Variable costs (for setups, materials handling, quality control, etc.) that vary with number of batches, 220 batches * $500 per batch 110,000 ⚫ Fixed Costs Fixed manufacturing costs Fixed marketing costs Total costs 300,000 200,000 $1,545,000 Carilla has just received a special one-time-only order for 4,000 pieces at $150 per piece. Accepting the special order would not affect the company's regular business. Carilla makes pieces for its existing customers in batch sizes of 50 pieces (220 batches 50 pieces per batch = 11,000 pieces). The…
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Example: The Jones Company currently manufactures all component parts used in the manufacture of various hand tools. A steel handle is used in three different tools. The budget for these handles is 20,000 units with the following unit cost: Direct material $0.60 Direct labor 0.40 Variable overhead 0.10 Fixed overhead 0.20 Total unit cost $1.30 Steel Co has offered to supply 20,000 units of the handle to Jones Company for $1.25 each, delivered. If Jones currently has idle capacity that cannot be used, accepting the offer will:
Campbell Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,200 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,900 6,400 4,100 9,600 26,600 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Campbell for $2.80 each. Required a. Calculate the total relevant cost. Should Campbell continue to make the containers? b. Campbell could lease the space it currently uses in the manufacturing process. If leasing would produce $12,800 per month, calculate the total avoidable costs. Should Campbell continue to make the containers? a. Total relevant cost Should Campbell continue to make the containers? b. Total avoidable cost Should Campbell continue to make the containers?
Anazi Leather Company manufactures leather handbags and moccasins. The company has been using the single plantwide factory overhead rate method but has decided to evaluate the multiple production department factory overhead rate method to allocate factory overhead. The factory overhead estimated per unit together with direct materials and direct labor will help determine selling prices. Handbags = 60,000 units, 3 hours of direct labor Moccasins = 40,000 units, 2 hours of direct labor Total budgeted factory overhead cost = $360,000 The company has two different production departments: Cutting and Sewing. The Cutting Department has a factory overhead budget of $80,000. Each unit will require 1 direct labor hour or a total of 100,000 direct labor hours. The Sewing Department estimates factory overhead in the amount of $280,000. Handbags require 2 hours of sewing time, and Moccasins require 1 hour for a total of 160,000 direct labor hours. Using the multiple production department factory…
Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $285,957, using 240,300 direct labor hours. The factory overhead budget for the Assembly Department is $362,356, using 62,800 direct labor hours. If a table lamp requires 3 hours of fabrication and 6 hour of assembly, the amount of factory overhead that Kaumajet Factory will allocate to each unit of table lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours is a.$92.91 b.$5.77 c.$10.32 d.$38.19
Kao Engines Inc. produces three products—pistons, valves, and cams—for the heavy equipment industry. Kao Engines’ production process uses a single plantwide factory overhead rate based upon direct labor hours to allocate overhead to the three products. The three products for 20Y2 are as follows: Product BudgetedVolume(Units) Direct LaborHours Per Unit Price PerUnit Selling PricePer Unit Pistons 7,500 0.40 $12 $40 Valves 16,000 0.50 6 75 Cams 4,000 0.20 20 60 The estimated direct labor rate is $25 per direct labor hour. Beginning and ending inventories are negligible and are, thus, assumed to be zero. The budgeted factory overhead for Kao Engines is $377,600. Question Content Area If required, round all per unit answers to the nearest cent. a. Determine the plantwide factory overhead rate.fill in the blank 1 of 1$ per dlh b. Determine the factory overhead and direct labor cost per unit for each product. Product Direct LaborHours Per Unit Factory OverheadCost Per…