Vaughn Groomers is in the dog-grooming business. Its operating costs are described by the following formulas: Grooming supplies (variable) • $0 + $5x Direct labor (variable) - $0 + $13x Overhead (mixed) - $9.900 + $2x Milo, the owner, has determined that direct labor is the cost driver for all three categories of costs (a)

Vaughn Groomers is in the dog-grooming business. Its operating costs are described by the following formulas: Grooming supplies (variable) • $0 + $5x Direct labor (variable) - $0 + $13x Overhead (mixed) - $9.900 + $2x Milo, the owner, has determined that direct labor is the cost driver for all three categories of costs (a)

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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Objective: Consider that you are an analyst at Regeneron Pharmaceuticals. You need to decide how to allocate administrative overhead costs to Regeneron's main commercial products (Eylea, Dupixent, Kevzara and Praluent). Determine how to appropriately allocate the costs in the table below to each of the commercial products using an allocation methodology of your choice. Department2019 Annual Operating ExpenseTime spent supporting Commercial productsCommercial$200MM100%IT$100MM25%Facilities$150MM0%Finance$25MM20%Human Resources$75MM10% Use the supporting document Net Product Sales of REGN Products to facilitate your analysis. Provide a written summary of how you allocated the overhead costs to each product in an outline of no more than one page. As a starting point, it's recommended that you revisit the material we covered in Chapter 12. Guidance on calculations:Start off with Net Product Sales of REGN Products. Your objective pertains to 2019 expenses, so you should be reviewing 2019…
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Q1. Calculate the cost of an interior door and an exterior door under the existing simple costing system.
What follows are a number of resources that are used by a manufacturer of futons. Assume thatthe output measure or cost driver is the number of futons produced. All direct labor is paid on an hourly basis, and hours worked can be easily changed by management. All other factoryworkers are salaried.a. Power to operate a drill (to drill holes in the wooden frames of the futons)b. Cloth to cover the futon mattressc. Salary of the factory receptionistd. Cost of food and decorations for the annual Fourth of July party for all factory employeese. Fuel for a forklift used to move materials in a factoryf. Depreciation on the factoryg. Depreciation on a forklift used to move partially completed goodsh. Wages paid to workers who assemble the futon framei. Wages paid to workers who maintain the factory equipmentj. Cloth rags used to wipe the excess stain off the wooden framesRequired:Classify the resource costs as variable or fixed.
Muffler Incorporated produces floor mats for cars and trucks. The owner, Kenneth Muffler, asked you to assist him in estimating his maintenance costs. Together, Mr. Muffler and you determined that the single best cost driver for maintenance costs was machine hours. Below are data from the previous fiscal year for maintenance expense and machine hours: Month 1 2 3 4 5 6 7 8 9 10 11 12 Multiple Choice O O о Maintenance Expense $ 3,440 O O Using the high-low method, total monthly fixed cost is calculated to be (Round final answer to full dollar amount with no decimal places): $212. $153. $520. $462. 3,630 3,810 3,940 3,940 4,320 3,930 $280. 3,740 3,460 3,080 2,940 3,200 Machine Hours 2,360 2,460 2,560 2,590 2,440 2,600 2,580 2,550 2,370 2,240 1,670 2,230
Uninder Company uses the high-low method to estimate the cost function. The information for 2017 is provided below: Machine-hours Labor Costs Highest observation of cost driver 550 $22,000 Lowest observation of cost driver 250 $13,000 What is the slope coefficient? Select one: a. $30.00 b. $40.00 c. $43.75 d. $52.00
A Midwest producer of specialty farming equipment, Agriboon, has three products that the company needs costing information about. The following information is available for each product. XY263 GO987 TR345 Direct material cost per unit $2.00 $8.00 $10.00 Direct labor cost per hour $15.00 $16.75 $18.00 Agriboon presently applies overhead using a predetermined rate based on direct labor hours. Estimated Direct Labor hours for the year are 132,026. The product leader for GO987 has suggested that Agriboon switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for the year: Activity Recommended Cost Driver Estimated Cost Estimated Cost Driver Units Materials Handling Requisition Request $38,912 1,216 Request Machine Operations Machine Hours $142,500 12,000 Hours Safety Compliance Compliance Test $125,000 1,100 Test Total OH…
Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate compl 2. Compute the contribution margin per unit. [assume direct labor is a fixed cost] 3. Compute the contribution margin per welding hour. [assume direct labor is a fixed cost] 4. Assuming direct labor is a fixed cost: a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. b. What is the increase (decrease) in net operating income that would result from this plan over current operations? 5. Compute the contribution margin per unit. [assume direct labor is a variable cost] 6. Compute the contribution margin per welding hour. [assume direct labor is a variable cost] 7. Assuming direct labor is a variable cost: a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. b.…
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1.26 The Company bears the following costs for the manufacture of weed cutting tools: Weed cutting shaft and scissor blade Weed cutting motor Factory work for workers assembling weed cutting shears Nylon yarn used in weed cutting machine(not detected on product) Glue to hold the housing Salaries of factory foremen Factory rent Sales commissions Salaries of administrators Factory utilities Shipping costs of finished weed cutting products to customers Requested: Describe the difference between period cost and product cost Classify Lawlor costs as period costs or product costs. One costs are product costs, then classify these as direct materials, direct labor or general industrial expenses.
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A firm makes a range of running shoes. There are three models – Short; Middle; and Long distance. The products are aimed at different segments of the market. Product costs are computed using an overhead rate based on the labour hour method. Selling prices are set on full cost plus 20%. A unit refers to a pair of running shoes. The following information is available: Short distance Middle distance Long distance Direct material cost per unit $25 $35 $40 Labour hours per unit 2 hrs 2 hrs 2 hrs Labour rate per hour $12 $12 $12 Total labour hours used 120,000 hrs 24,000 hrs 16,000 hrs Total number of units 60,000 units 12,000 units 8,000 units Cost driver information: Short distance Middle distance Long distance No. of machine hours 60,000 48,000 48,000 No. of material orders 30 100 200 No. of sales orders 12 48 63 The total overhead costs for the business amount to $1.2…