MANAGERIAL ACCT(LL)+CONNECT+PROCTORIO PL
17th Edition
ISBN: 9781265574826
Author: Garrison
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2.B, Problem 1E
EXERCISE 2B-1
Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty7 woods. The company uses a
The results of a recent month’s operations appear below:
Required:
- Prepare an income statement following the example in Exhibit 2B-1 that records the cost of unused capacity on the income statement as a period expense.
- Why do unused capacity costs arise when the predetermined overhead rate is based on capacity?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please answer all of them
Need help with this question
Number 4
Smithson, Inc. produces two types of gas grills: a family model and a deluxe model. Smithson's
controller has decided to use a plantwide overhead rate based on direct labor costs The
president of the company recently heard of activity-based costing and wants to see how the
results would differ if this system were used. Two activity cost pools were developed:
machining and machine setup. Presented below is information related to the company's
operations:
Family Model
$75,000
2,000
200
Deluxe Model
$150,000
2,000
800
Direct labor costs
Machine hours
Setup hours
cton
Total estimated overhead costs are $450,000. Overhead cost allocated to the machining
activity cost pool is $270,000 and $180,000 is allocated to the machine setup activity cost pool
Instructions
Compute the overhead rate using the traditional (plantwide) approach.
Compute the overhead rates using the activity-based costing approach.
Determine the difference in allocation between the two approaches.
Smithson, Inc.…
Chapter 2 Solutions
MANAGERIAL ACCT(LL)+CONNECT+PROCTORIO PL
Ch. 2.A - EXERCISE 2A-1 Activity-Based Absorption Costing...Ch. 2.A - EXERCISE 2A-2 Activity-Based Absorption Costing as...Ch. 2.A - EXERCISE 2A-3 Activity-Based Absorption Costing as...Ch. 2.A - PROBLEM 2A-4 Activity-Based Absorption Costing as...Ch. 2.A - Prob. 5PCh. 2.A -
CASE 2A-6 Activity-Based Absorption Costing and...Ch. 2.B - EXERCISE 2B-1 Overhead Rate Based on Capacity...Ch. 2.B - EXERCISE 2B-2 Overhead Rates and Capacity Issues...Ch. 2.B - Prob. 3PCh. 2.B - Prob. 4C
Ch. 2 - Prob. 1QCh. 2 - What is absorption costing?Ch. 2 - What is normal costing?Ch. 2 - How is the unit product cost of a job calculated?
Ch. 2 - Explain the four-step process used to compute a...Ch. 2 - What is the purpose of the job cost sheet in a...Ch. 2 - Explain why some production costs must be assigned...Ch. 2 - Why do companies use predetermined overhead rates...Ch. 2 - What factors should be considered in selecting an...Ch. 2 - If a company fully allocates all of its overhead...Ch. 2 - Would you expect the amount of applied overhead...Ch. 2 - Prob. 12QCh. 2 - What is a plantwide overhead rate? Whyare multiple...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - Prob. 3AECh. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - Prob. 1F15Ch. 2 - Prob. 2F15Ch. 2 - Prob. 3F15Ch. 2 - Prob. 4F15Ch. 2 - Prob. 5F15Ch. 2 - Prob. 6F15Ch. 2 - Prob. 7F15Ch. 2 - Prob. 8F15Ch. 2 - Prob. 9F15Ch. 2 - Prob. 10F15Ch. 2 - Prob. 11F15Ch. 2 - Sweeten Company had no jobs in progress at the...Ch. 2 - Prob. 13F15Ch. 2 - Prob. 14F15Ch. 2 - Prob. 15F15Ch. 2 - EXERCISE 2-1 Compute a Predetermined Overhead Rate...Ch. 2 - Prob. 2ECh. 2 - EXERCISE 2–3 Computing Total Job Costs and Unit...Ch. 2 - EXERCISE 24 Computing Total Job Costs and Unit...Ch. 2 - EXERCISE 2-5 Computing Total Job Costs and Unit...Ch. 2 - Prob. 6ECh. 2 - EXERCISE 2-7 Job-Order Costing; Working Backwards...Ch. 2 - EXERCISE 2-8 Applying Overhead Cost; Computing...Ch. 2 - EXERCISE 2–9 Job-Order Costing and Decision Making...Ch. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - Prob. 12ECh. 2 - EXERCISE 2—13 Departmental Predetermined Overhead...Ch. 2 - EXERCISE 214 Job-Orders Costing for a Service...Ch. 2 - Prob. 15ECh. 2 - PROBLEM 2—16 Plantwide Predetermined Overhead...Ch. 2 - PROBLEM 217 Plantwide and Departmental...Ch. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - Prob. 20PCh. 2 - PROBLEM 2-21 Plant wide Versus Multiple...Ch. 2 - CASE 2-22 Plantwide versus Departmental Overhead...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 6arrow_forwardTB Problem 5-163 (Algo) Roadmaster Tires produces a variety... Roadmaster Tires produces a variety of auto and truck tires at its Indianapolis manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The costs and cost drivers associated with four activity cost pools are given below: Activities: Cost Cost Driver Unit Level $88,400 5,200 labor hours Batch Level $66,000 220 setups Production of 1,000 units of a small tractor tire required 320 labor hours and two setups and consumed 20% of the product sustaining activities. a. Overhead allocated using company-wide allocation base b. Overhead allocated under activity-based costing e-1. Selling price per unit under direct labor hours approach 0-2. Selling price per unit under activity-based costing Product Level $30,000 % of use Required: a. Instead of using ABC, suppose the company had used labor hours as a company-wide allocation base. How much…arrow_forwardQ-4: Al Hamd associate manufactures two types of product X & Y and applies manufacturing overhead to all units on the basis of machine hour. Production information follows: Product X Anticipated volume (Units) Direct materials cost Direct labor cost 16,000 Rs70 Product Y 30,000 Rs120 Rs40 Rs40 The controller, who is studying the use of ABC, has determined that the firm's overhead can be identified with three activities: Activity Manufacturing setup Machine processing Product shipping Cost driver Number of setups Machine hours Outgoing shipments The activities and their respective cost drivers are as follows: Product X 100 Product Y 60 Total 160 Setups Machine hours 32,000 200 45,000 150 77,000 350 Outgoing shipments The firm total overhead of Rs.6,160,000 is subdivided as follows: Manufacturing setup Machine processing Product shipping Rs.1,344,000 Rs.3,696,000 Rs.1,120,000 Rs.6,160,000 Total Required: A. Compute the total cost of product X and Y by using company's current overhead…arrow_forward
- QUESTION 10 Lawn and Order Company manufactures industrial sprinklers and uses an activity-based costing system to allocate overhead to its products. Each sprinkler consists of 6 separate parts totaling $3 in direct materials, $2 in direct labor and requires 1 hour of machine time to produce. Additional information follows Overhead Cost Pools Pre-determined Overhead Rate Materials handling Number of parts $0.40 per part Machining Machine hours $1.50 per machine hour Assembling Inspecting Number of parts $0.40 per part Number of finished units $0.30 per finished unit Determine the amount of overhead allocated to each sprìnkler. Round your answer to 2 decimal placesarrow_forwardWant answer ASAParrow_forwardTechno Incorporated manufactures two models of cameras that can be used as cell phones, MPX, and digital camcorders. Model Annual Sales in Units High F 11,100 Great P 17,100 Techno uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows: High F Great P Direct materials $ 39.10 $ 26.50 Direct labor $ 18.70 $ 14.30 Budget factory overhead: Engineering and Design 2,620 engineering hours $ 445,400 Quality Control 13,050 inspection hours 336,700 Machinery 33,930 machine hours 608,940 Miscellaneous Overhead 26,610 direct labor hours 132,550 Total $ 1,523,590 Techno's controller had been researching activity-based costing and decided to switch to it. A special study determined Techno's two products have the following budgeted activities: High F Great P…arrow_forward
- Techno Incorporated manufactures two models of cameras that can be used as cell phones, MPX, and digital camcorders. Model High F Great P Annual Sales in Units 10,800 16,800 Techno uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows: Direct materials Direct labor High Fi $ 38.80 $18.40 Budget factory overhead: Engineering and Design Quality Control Machinery Miscellaneous Overhead Total Great P $ 26.20 $14.00 Engineering and design hours Quality control inspection hours Machine hours Labor hours 2,560 engineering hours. 12,990 inspection hours 33,870 26,550 machine hours direct labor hours Techno's controller had been researching activity-based costing and decided to switch to it. A special study determined Techno's two products have the following budgeted activities: High F 1,040 5,720 20,360 12,080. Great P 1,520 7,270 $ 409,600 271,320 540,800 132,400 $ 1,354,120 13,510 14,470 What is the…arrow_forward1- Chapters 1,2, & 4 i 12 D N 5 X Direct labor hours Machine hours Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table: # Multiple Choice 13 3 Tarnish Industries uses departmental overhead rates and is planning on a $4.10 per machine hour overhead rate for the Finishing department. Compute the budgeted manufacturing overhead cost for the Finishing department given the information shown in the table. O E . D C $307,500 $658,050 $401,800 (4 $ 4 R F Molding 75,000 DLH 98,000 MH % 5 T G fo 40 Finishing 160,500 DLH 81,500 MH 6 Y & H 4 Q Search 7 V B N A4 P 112 { [ 27 1 prt sc Help } pause Save & Exit delete backspace home lock enterarrow_forwardProblem A. Poodle Company manufactures two products, Mini A and Max B. Poodle's overhead costs consist of setting up machines P800,000, machining P1,800,000, and inspecting 100,000. Information on the two products Mini A Мaxi в Direct labor hours 15,000 25,000 Machine setups 400 600 Machine hours 24,000 800 26,000 | Inspections 700 Determine the following: 1. Overhead applied to Mini A using traditional costing based on direct labor hours is 2. Overhead applied to Maxi B using traditional costing based on direct labor hours is 3. Overhead applied to Mini A using activity-based costing is 4. Overhead applied to Maxi B using activity-based costing isarrow_forward
- Provide answer for the questionarrow_forwardTechno Incorporated manufactures two models of cameras that can be used as cell phones, MPX, and digital camcorders. Model High F Great P Annual Sales in Units 10,700 16,700 Techno uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows: Direct materials Direct labor Budget factory overhead: Engineering and Design Quality Control Machinery Miscellaneous Overhead Total High F $38.70 $18.30 Great P $26.10 $ 13.90 Engineering and design hours Quality control inspection hours Machine hours Labor hours 2,540 12,970 33,850 26,530 engineering hours inspection hours machine hours direct labor hours Techno's controller had been researching activity-based costing and decided to switch to it. A special study determined Techno's two products have the following budgeted activities: High F 1,030 5,710 20,350 12,070 Prev Great P 1,510 7,260 13,500 14,460 Using the firm's volume-based costing, applied factory…arrow_forwardPlease do not give solution in image format thankuarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Financial & Managerial Accounting
Accounting
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY