Financial and Managerial Accounting
7th Edition
ISBN: 9781259726705
Author: John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 17, Problem 1QS
To determine
Activity Based Costing:
Method of recognizing activities in the organization and allotment of cost of each activity thereto is known as activity based costing.
Plant Wide Overhead Rate:
Plant wide overhead rate is the method which uses total overhead costs incurred during the production and the allocation base that is total direct labor hours, to determine overhead rate.
Departmental Overhead Rate:
Departmental overhead rate uses estimated overhead of a particular department by dividing its estimated level of activities within the same department.
To identify: Correct options.
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You have been asked to test the effectiveness of Ingo Corporation’s control of manually approving all purchases over $25,000. During the year, Ingo Corporation has made 1,000,000 purchases, of which 3,000 were over $25,000. Jian Zhang, CPA, your supervisor, asked you to use a tolerable deviation rate of 4 percent (although she expects the rate to be only approximately 0.50 percent) and a 5 percent risk of assessing control risk too low. Use the following to determine the planned assessed level of control risk and the assessed level of control risk.
(Planned) Assessed Level of Control Risk
Tolerable Deviation Rate
Low
2−7%
Moderate
6−12%
Slightly below the maximum
11−20%
Maximum
Over 20%
b. Determine the appropriate sample size and allowable number of deviations using Figure 9.4.
sample size:
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Chapter 17 Solutions
Financial and Managerial Accounting
Ch. 17 - Prob. 1MCQCh. 17 - Prob. 2MCQCh. 17 - All of the following are examples of batch-level...Ch. 17 - Prob. 4MCQCh. 17 - Prob. 5MCQCh. 17 - Why are overhead costs allocated to products and...Ch. 17 - What are three common methods of assigning...Ch. 17 - Why are direct labor hours and machine hours...Ch. 17 - What are the advantages of using a single plant...Ch. 17 - The usefulness of a single plant wide overhead...
Ch. 17 - What is a cost object?Ch. 17 - Explain why a single plantwide overhead rate can...Ch. 17 - Why are multiple departmental overhead rates more...Ch. 17 - Prob. 9DQCh. 17 - Prob. 10DQCh. 17 - Prob. 11DQCh. 17 - Prob. 12DQCh. 17 - Prob. 13DQCh. 17 - Prob. 14DQCh. 17 - 15. What are the four activity levels associated...Ch. 17 - Prob. 16DQCh. 17 - Prob. 17DQCh. 17 - Prob. 1QSCh. 17 - Prob. 2QSCh. 17 - Plant wide rate method P1 A manufacturer uses...Ch. 17 - Prob. 4QSCh. 17 - Computing departmental overhead rates P2 Refer to...Ch. 17 - QS 17-6 Advantages of plant wide and department...Ch. 17 - Prob. 7QSCh. 17 - Prob. 8QSCh. 17 - Prob. 9QSCh. 17 - Prob. 10QSCh. 17 - Prob. 11QSCh. 17 - Prob. 12QSCh. 17 - Prob. 13QSCh. 17 - Prob. 14QSCh. 17 - Prob. 15QSCh. 17 - Exercise 17-1 Computing Plantwide overhead rates...Ch. 17 - Prob. 2ECh. 17 - Prob. 3ECh. 17 - Prob. 4ECh. 17 - Exercise 17-5 Departmental overhead rates P2 Refer...Ch. 17 - Prob. 6ECh. 17 - Prob. 7ECh. 17 - Prob. 8ECh. 17 - Prob. 9ECh. 17 - Prob. 10ECh. 17 - Prob. 11ECh. 17 - Prob. 12ECh. 17 - Prob. 13ECh. 17 - Exerciser 17-14 Activity-based costing P3 A2...Ch. 17 - Prob. 15ECh. 17 - Prob. 16ECh. 17 - Exercise 17-17 Identifying activity levels C3...Ch. 17 - Prob. 18ECh. 17 - Problem 17-1A Comparing costs using ABC with the...Ch. 17 - Prob. 2PSACh. 17 - Prob. 3PSACh. 17 - Prob. 4PSACh. 17 - Prob. 5PSACh. 17 - Prob. 1PSBCh. 17 - Prob. 2PSBCh. 17 - Prob. 3PSBCh. 17 - Prob. 4PSBCh. 17 - Prob. 5PSBCh. 17 - Prob. 17SPCh. 17 - Prob. 1BTNCh. 17 - Prob. 2BTNCh. 17 - Prob. 3BTNCh. 17 - Prob. 4BTNCh. 17 - Accounting professionals who for private companies...Ch. 17 - Prob. 6BTNCh. 17 - Prob. 7BTNCh. 17 - Visit and observe the processes of three different...Ch. 17 - Prob. 9BTN
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- You have been asked to test the effectiveness of Ingo Corporation’s control of manually approving all purchases over $25,000. During the year, Ingo Corporation has made 1,000,000 purchases, of which 3,000 were over $25,000. Jian Zhang, CPA, your supervisor, asked you to use a tolerable deviation rate of 4 percent (although she expects the rate to be only approximately 0.50 percent) and a 5 percent risk of assessing control risk too low. Use the following to determine the planned assessed level of control risk and the assessed level of control risk. (Planned) Assessed Level of Control Risk Tolerable Deviation Rate Low 2−7% Moderate 6−12% Slightly below the maximum 11−20% Maximum Over 20% Expected Population Deviation Rate (as Percentages) Tolerable Deviation Rate 2% 3% 4% 5% 6% 7% 8% 9% 10% 15% 20% 0.00% 149(0) 99(0) 74(0) 59(0) 49(0) 42(0) 36(0) 32(0) 29(0) 19(0) 14(0) 0.25 236(1) 157(1) 117(1) 93(1) 78(1) 66(1) 58(1) 51(1) 46(1) 30(1) 22(1) 0.50 * 157(1)…arrow_forwardWhat is taxable income? Financial accountingarrow_forwardI need the correct answer to this financial accounting problem using the standard accounting approach.arrow_forward
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