Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base. The allocation of fixed administrative expenses among the three restaurants for this year.

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Answer 1

Question

Chapter 11, Problem 11.10E

1.

To determine

Introduction: Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

Introduction: There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

Introduction: A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

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Daniels Corporation applies manufacturing overhead to products based on standard direct labor-hours. The budgeted fixed manufacturing overhead cost for the most recent quarter was $37,500, and the actual fixed manufacturing overhead cost for the quarter was $38,200. The company based its original budget on 7,500 direct labor-hours. The standard hours allowed for the actual output of the quarter totaled 7,100 direct labor-hours. a. What was the overall fixed manufacturing overhead budget variance for the quarter? b. What was the fixed overhead rate? c. What was the volume variance? Help

Can you explain the correct approach to solve this general accounting question?

Nixon Corporation recorded a loss of $7,200 when it sold equipment that originally cost $93,000 for $21,500. Accumulated depreciation on the equipment must have been__.

Answer 2

Question

Chapter 11, Problem 11.10E

1.

To determine

Introduction: Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

Introduction: There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

Introduction: A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 11, Problem 11.10E

1.

To determine

Introduction: Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

Introduction: There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

Introduction: A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 11.10E

1.

To determine

Introduction: Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

Introduction: There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

Introduction: A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 11.10E

1.

To determine

Introduction: Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

The allocation of fixed administrative expenses among the three restaurants for this year.

2.

To determine

Introduction: There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

The change in each restaurant’s allocated costs from last year to this year.

3.

To determine

Introduction: A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Answer 6

Chapter 11, Problem 11.10E

1.

To determine

Introduction: Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

The allocation of fixed administrative expenses among the three restaurants for this year.

Answer 7

Chapter 11, Problem 11.10E

1.

To determine

Introduction: Cost allocation is a process of assigning or allocating indirect costs to every unit using a predetermined overhead rate. The predetermined overhead rate is determined by dividing the estimated total cost by the estimated activity base.

The allocation of fixed administrative expenses among the three restaurants for this year.

Answer 8

2.

To determine

Introduction: There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

The change in each restaurant’s allocated costs from last year to this year.

Answer 9

2.

To determine

Introduction: There are two types of changes which are positive changes and negative changes. A positive change will reflect an increase in the cost allocated to the respective restaurant whereas a negative change reflects a decrease in fixed cost allocated to the department.

The change in each restaurant’s allocated costs from last year to this year.

Answer 10

3.

To determine

Introduction: A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Answer 11

3.

To determine

Introduction: A cost allocation base is referred to the factors or basis upon which an organization allocates its overhead costs. The major cost allocation base can be direct labor used, direct material used, machine hours used, an area used by each department, sales, profit earned, and so on.

To discuss:

The usefulness of sales dollars as an allocation base.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11 - Prob. 11.1Q Ch. 11 - Prob. 11.2Q Ch. 11 - Prob. 11.3Q Ch. 11 - Prob. 11.4Q Ch. 11 - Prob. 11.5Q Ch. 11 - Prob. 11.6Q Ch. 11 - Prob. 11.7Q Ch. 11 - Prob. 11.8Q Ch. 11 - Prob. 11.9Q Ch. 11 - Why is using sales dollars as an allocation base...

Solution Summary: The author explains that cost allocation is the process of assigning or allocating indirect costs to every unit using a predetermined overhead rate.

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