Themba Ltd manufactures two types of soccer balls, namely Training and Match balls. Fixedmanufacturing overheads (FMO) are allocated to products using activity-based costing (ABC).Below is the Activity area and the FMO applicable to this area.Activity areaSet-up costsMachine costsQuality inspectionsFixed manufacturingoverheadsR480 0001 600 500800 000• Set-up costs: The manufacturing machines need to be set up before each production run. The ballsare manufactured in production runs and each independent Training production run contains 250balls and each independent Match production run contains 100 balls.• Machine cost: Temba's production process is highly automated, and it takes 15 machine minutesand 24 machine minutes to manufacture one Training and one Match ball respectively.• Quality inspections: Every 10th Match ball and every 200th Training ball is quality inspected.• Temba manufactured 500 000 Training balls and 100 000 Match balls.The total quality inspection cost activity rate is:Select one:a. R64,00b. None of the optionsC.R3 809,52○ d. R266,67e. R1,33

The objective of the question is to calculate the total quality inspection cost activity rate for…

Answered: Themba Ltd manufactures two types of…

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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Nobel Ltd adopts process costing rather than job costing. Which of the following statement could explain why? a. Nobel Ltd produces units according to customer specifications. b. Nobel Ltd wants to track the cost of material, labour and overhead to specific customers. c. Nobel Ltd wants to assign overhead using machine hours as the allocation base. d. Nobel Ltd manufactures virtually identical products using a series of continuous processes.
Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Activity Rate $ 18 per direct labor-hour $190 per order $ 258 per custom design $ 416 per customer Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs. Direct labor-hours per glider Selling price per glider Direct materials cost per glider The company's direct labor rate is $16 per hour. Standard Model 11 2 0 28.50 $ 1,900 $ 462 Custom Design 2 2 33.00 $2,500 $ 584 Required: Using the company's activity-based costing system,…
LockTite Company produces two products, Pretty Safe (PS) and Virtually Impenetrable (VI). The following two tables give pertinent information about these products. Solve, a. What is the cost per unit of Pretty Safe if LockTite uses traditional overhead allocation based on number of units produced? b. What is the cost per unit of Pretty Safe if LockTite uses activity-based costing to allocate overhead?
Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Activity Rate $ 18 per direct labor-hour $ 200 per order $ 264 per custom design $ 432 per customer Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider Standard Model Custom Design 15 2 2 2 0 2 30.50 34.00 $ 1,850 $ 452 $ 2,480 $ 582 The company's direct labor rate is $20 per hour. Required: Using the company's activity-based costing system,…
Campbell Electronics produces video games in three market categories: commercial, home, and miniature. Campbell has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Additional data for each of the product lines follow: Direct materials cost Direct labor cost Number of labor hours Number of machine hours Number of production orders Research and development time Number of units. Square footage Required Total Pooled Cost $ 376,000 206,400 109,600 304,000 Type of Product a. Commercial a. Home a. Miniature Combined total b. Commercial b. Home b. Miniature Combined total Types of Costs Indirect labor wages, supplies,…
Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to calculate product cost. Activity Cost Pools EstimatedTotal Cost Estimated Cost Driver Machining $ 334,000 13,600 machine hours Setup 76,000 420 batches Quality control 103,000 830 inspections Compute the activity rates for each of the following activity cost pools: How do you find the activitiy costs???
Gable Company uses three activity pools. Each pool has a cost driver. Information for Gable Company follows: Total Cost of Pool $ 380, 120 86,400 74,672 Estimated Cost Driver 88,400 9,000 525 Activity Pools Machining Designing costs Setup costs E4-5 (Algo) Assigning Costs Using Activity Proportions [LO 4-5, 4-6] Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows: Product A 34,000 3,600 60 Number of machine hours Number of design hours Number of batches Cost Driver Number of machine hours Number of design hours Number of batches Product A Product B Product C Total Overhead Assigned Product B Product C 10,400 3,400 285 Required: 1. Using activity proportions, determine the amount of overhead assigned to each product. Note: Do not round your intermediate calculations. Round your final answers to nearest whole number. 44,000 2,000 180
Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Activity Rate $20 per direct labor-hour $ 192 per order $ 265 per custom design $ 432 per customer Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Standard Model Custom Design Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider The company's direct labor rate is $18 per hour. Required: 15 200 28.50 $ 1,850 $ 470 2220 34.00 $ 2,480 $ 572 Using the company's activity-based costing system,…
Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Activity Rate $ 16 per direct labor-hour $ 200 per order $ 258 per custom design $ 430 per customer Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider The company's direct labor rate is $20 per hour. Required: Standard Model Custom Design 14 3 2 3 0 29.50 3 33.00 $ 2,410 $ 580 $ 1,800 $ 448 Using the company's activity-based…

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