1.
Concept Introduction:
Total variable costs have a direct relationship with the activity base. It increases or decreases in approximate proportion to increase or decrease in the activity base respectively.
Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and
The cafeteria cost charges to the Auto division, and Truck division.
2.
Cost allocation: Cost allocation is a process of assigning or allocating costs to each and every unit or division using a predetermined rate. It helps to determine which division or unit of a company is responsible for which costs.
The total cost allocated to each division if the cafeteria cost is allocated based on the number of meals served.
3.
Cost allocation: Cost allocation is a process of assigning or allocating costs to each and every unit or division using a predetermined rate. It helps to determine which division or unit of a company is responsible for which costs.
The criticism of the allocation method used in Part (2).
4.
Fixed costs: Total fixed costs do not change with the change in activity base provided that activities are performed within the relevant range. Fixed costs are period costs such as rent, interest on loans, and depreciation. These costs have to be paid whether production occurs or not. That is why fixed costs remain the same at all levels of production.
The strategy taken by managers of operating departments to estimate peak-period requirement and the steps should be taken by the top management to neutralize such strategies.
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Chapter 11 Solutions
MANAGERIAL ACCOUNTING E-CARD W/ CONNECT
- Mit Distributors provided the following inventory-related data for the fiscal year: Purchases: $385,000 Purchase Returns and Allowances: $10,200 Purchase Discounts: $4,300 Freight In: $55,000 Beginning Inventory: $72,000 Ending Inventory: $95,500 What is the Cost of Goods Sold (COGS)?arrow_forwardanswer ? general accountingarrow_forwardBrightTech Corp. reported the following cost of goods sold (COGS) figures over three years: • 2023: $3,800,000 • 2022: $3,500,000 • 2021: $3,000,000 If 2021 is the base year, what is the percentage increase in COGS from 2021 to 2023?arrow_forward
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- subject : general accounting questionarrow_forwardBrightTech Inc. had stockholders' equity of $1,200,000 at the beginning of June 2023. During the month, the company reported a net income of $300,000 and declared dividends of $175,000. What was BrightTech Inc.. s stockholders' equity at the end of June 2023?arrow_forwardQuestion 3Footfall Manufacturing Ltd. reports the following financialinformation at the end of the current year: Net Sales $100,000 Debtor's turnover ratio (based on net sales) 2 Inventory turnover ratio 1.25 fixed assets turnover ratio 0.8 Debt to assets ratio 0.6 Net profit margin 5% gross profit margin 25% return on investments 2% Use the given information to fill out the templates for incomestatement and balance sheet given below: Income Statement of Footfall Manufacturing Ltd. for the year endingDecember 31, 20XX(in $) Sales 100,000 Cost of goods sold gross profit other expenses earnings before tax tax @ 50% Earnings after tax Balance Sheet of Footfall Manufacturing Ltd. as at December 31, 20XX(in $) Liabilities Amount Assets Amount Equity Net fixed assets long term debt 50,000 Inventory short term debt debtors cash Total Totalarrow_forward
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