Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 4, Problem 11E
Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows:
Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow:
- a. Determine the activity rate for each activity.
- b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round to the nearest cent.
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Idris Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted
activity costs and activity bases are as follows:
Budgeted
Activity Cost
Activity
Activity Base
Casting
Machine hours
Assembly
Direct labor hours
Inspecting
Number of inspections
Setup
Number of setups
Materials handling
Number of loads
Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced
follow:
Activity
Casting
Assembly
Inspecting
$210,680
146,160
18,810
47,950
46,000
Activity Base
Entry Dining
Machine hours
4,850
4,310
Direct labor hours
4,180
6,260
Number of inspections
1,300
410
Number of setups
280
Number of loads
790
Units produced
9,600
4,800
a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar.
Activity Rate
70
210
Total
9,160
10,440
1,710
350
1,000
14,400…
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are
shown in the following table:
Budgeted Activity
Activity
Budgeted Cost Activity Cost Driver
Product A
Product B
Product C
$ 70,000
$ 45,000
$ 82,000
Square feet
Units inspected
Activity 1
6,000
9,000
20,000
Activity 2
Activity 3
7,000
15,000
8,000
Setups
2,500
1,000
1,625
What are the activity rates for the three activities under activity-based costing?
Multiple Choice
(1) $2.00 per square foot; (2) $3.00 per unit; (3) $3.50 per setup.
(1) $3.50 per square foot; (2) $1.50 per unit; (3) $32,80 per setup.
(1) $3.50 per square foot; (2) $3.00 per unit; (3) $16.00 per setup.
(1) $2.00 per square foot: (2) $1.50 per unit; (3) $16.00 per setup.
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the
company's three activity cost pools are shown in the following table:
BUDGETED ACTIVITY
Budgeted Cost Product A
$70,000
$45,000
$82,000
Activity Cost Pool
Activity 1
Activity 2
Activity 3
How much overhead will be assigned to Product B using activity-based costing?
Product B
9,000
15,000
1,000
6,000
7,000
2,500
Product C
20,000
8,000
1,625
Chapter 4 Solutions
Managerial Accounting
Ch. 4 - Why would management be concerned about the...Ch. 4 - Why would a manufacturing company with multiple...Ch. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - How does activity-based costing differ from the...Ch. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Under what circumstances might the activity-based...Ch. 4 - Prob. 9DQCh. 4 - Prob. 10DQ
Ch. 4 - Single plantwide factory overhead rate The total...Ch. 4 - Multiple production department factory overhead...Ch. 4 - Activity-based costing: factory overhead costs The...Ch. 4 - Activity-based costing: selling and administrative...Ch. 4 - Activity-based costing for a service business...Ch. 4 - Kennedy Appliance Inc.s Machining Department...Ch. 4 - Bach Instruments Inc. makes three musical...Ch. 4 - Scrumptious Snacks Inc. manufactures three types...Ch. 4 - Isaac Engines Inc. produces three productspistons,...Ch. 4 - Handy Leather, Inc., produces three sizes of...Ch. 4 - Eclipse Motor Company manufactures two types of...Ch. 4 - The management of Nova Industries Inc....Ch. 4 - Comfort Foods Inc. uses activity-based costing to...Ch. 4 - Nozama.com Inc. sells consumer electronics over...Ch. 4 - Hercules Inc. manufactures elliptical exercise...Ch. 4 - Lonsdale Inc. manufactures entry and dining room...Ch. 4 - Activity cost pools, activity rates, and product...Ch. 4 - Handbrain Inc. is considering a change to...Ch. 4 - Prob. 14ECh. 4 - Activity-based costing and product cost distortion...Ch. 4 - Prob. 16ECh. 4 - Evaluating selling and administrative cost...Ch. 4 - Prob. 18ECh. 4 - Prob. 19ECh. 4 - Activity-based costing for a service company...Ch. 4 - Bounce Back Insurance Company carries three major...Ch. 4 - Gwinnett County Chrome Company manufactures three...Ch. 4 - The management of Gwinnett County Chrome Company,...Ch. 4 - Activity-based and department rate product costing...Ch. 4 - Activity-based product costing Mello Manufacturing...Ch. 4 - Allocating selling and administrative expenses...Ch. 4 - Product costing and decision analysis for a...Ch. 4 - Single plantwide factory overhead rate Spotted Cow...Ch. 4 - Multiple production department factory overhead...Ch. 4 - Activity-based department rate product costing and...Ch. 4 - Activity-based product costing Sweet Sugar Company...Ch. 4 - Allocating selling and administrative expenses...Ch. 4 - Product costing and decision analysis for a...Ch. 4 - Life Force Fitness, Inc., assembles and sells...Ch. 4 - Prob. 2MADCh. 4 - Prob. 3MADCh. 4 - Production run size and activity improvement...Ch. 4 - Prob. 5MADCh. 4 - Ethics in Action The controller of Tri Con Global...Ch. 4 - Communication The controller of New Wave Sounds...Ch. 4 - Pelder Products Company manufactures two types of...Ch. 4 - The Chocolate Baker specializes in chocolate baked...Ch. 4 - Young Company is beginning operations and is...Ch. 4 - Cynthia Rogers, the cost accountant for Sanford...
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