Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 28E
Assume that the inspection activity has an expected cost of $120,000. Expected direct labor hours are 3,000, and expected number of inspections is 600. The best activity rate for inspection is as follows:
- a. $40 per inspection
- b. $40 per hour
- c. $200 per inspection
- d. $200 per hour
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The cost formula for the maintenance department of Rambo Limited is $19,200 per month plus $7.50 per machine hour used by the
production department.
Required:
a. Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used.
b. Prepare an appropriate performance report for the maintenance department assuming that 7,100 machine hours would be used in
the month of May and that the total actual maintenance cost incurred in May was $68,950.
Complete this question by entering your answers in the tabs below.
Required A Required B
Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used.
Maintenance cost
Assume that the moving activity has an expected cost of $80,000. Expected directlabor hours are 20,000, and expected number of moves is 40,000. The best activity ratefor moving isa. $4 per move.b. $1.33 per hour-move.c. $4 per hour.d. $2 per move.e. None of these.
A company estimates its manufacturing overhead will be $630,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases? When required, round your answers to nearest cent.
A. Budgeted direct labor hours: 72,000
$______ per direct labor hour
B. Budgeted direct labor expense: $1,800,000
$_____ per direct labor dollar
C. Estimated machine hours: 120,000
$_____ per machine hour
Chapter 4 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 4 - What is a predetermined overhead rate? Explain why...Ch. 4 - Describe what is meant by under- and overapplied...Ch. 4 - Explain how a plantwide overhead rate, using a...Ch. 4 - What are non-unit-related overhead activities?...Ch. 4 - What is an overhead consumption ratio?Ch. 4 - Overhead costs are the source of product cost...Ch. 4 - What is activity-based product costing?Ch. 4 - What are the six steps that define the design of...Ch. 4 - Explain how the cost of resources is assigned to...Ch. 4 - Prob. 10DQ
Ch. 4 - Identify and define two types of activity drivers.Ch. 4 - What are unit-level activities? Batch-level...Ch. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - Prob. 1CECh. 4 - Warner Company has the following data for the past...Ch. 4 - Lansing. Inc., provided the following data for its...Ch. 4 - Larsen, Inc., produces two types of electronic...Ch. 4 - Roberts Company produces two weed eaters: basic...Ch. 4 - Golding Bank provided the following data about its...Ch. 4 - Golding Bank provided the following data about its...Ch. 4 - Electan Company produces two types of printers....Ch. 4 - Patterson Company produces wafers for integrated...Ch. 4 - Selected activities and other information are...Ch. 4 - Ripley, Inc., costs products using a normal...Ch. 4 - Predetermined Overhead Rate, Application of...Ch. 4 - Craig Company uses a predetermined overhead rate...Ch. 4 - Departmental Overhead Rates Mariposa, Inc.,...Ch. 4 - McCourt Company produces two types of leather...Ch. 4 - Deoro Company has identified the following...Ch. 4 - Prob. 17ECh. 4 - Secondary Activities Refer to the interview in...Ch. 4 - Bob Randall, cost accounting manager for Hemple...Ch. 4 - Prob. 20ECh. 4 - Bob Randall, cost accounting manager for Hemple...Ch. 4 - Silven Company has identified the following...Ch. 4 - Silven Company has identified the following...Ch. 4 - Gee Manufacturing produces two models of camshafts...Ch. 4 - Cushing, Inc., costs products using a normal...Ch. 4 - Nonunit-level drivers are prominent in...Ch. 4 - Plata Company has identified the following...Ch. 4 - Assume that the inspection activity has an...Ch. 4 - Consider the information given on two products and...Ch. 4 - Primera Company produces two products and uses a...Ch. 4 - Fisico Company produces exercise bikes. One of its...Ch. 4 - Prob. 32PCh. 4 - Glencoe First National Bank operated for years...Ch. 4 - Autotech Manufacturing is engaged in the...Ch. 4 - The Bienestar Cardiology Clinic has two major...Ch. 4 - Reducir, Inc., produces two different types of...Ch. 4 - Refer to the data given in Problem 4.36 and...Ch. 4 - Escuha Company produces two type of calculators:...
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- A company estimates its manufacturing overhead will be $1,080,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases? When required, round your answers to nearest cent. A. Budgeted direct labor hours: 72,000 $fill in the blank 1 per direct labor hour B. Budgeted direct labor expense: $1,800,000 $fill in the blank 2 per direct labor dollar C. Estimated machine hours: 120,000 $fill in the blank 3 per machine hourarrow_forward5. A company estimates its manufacturing overhead will be $750,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases? Budgeted direct labor hours: 60,000 ? per ?. Budgeted direct labor: $1,500,000 ? per ?. Estimated machine hours: 100,000 ? per ?. PLEASE NOTE: Predetermined overhead rates will be rounded to two decimal places and shown with "$" and commas as needed (i.e. $12,345.67). The rates will include their proper label according to the textbook examples (no abbreviations).arrow_forwardThe overhead costs for a company are presently $Xper month. The management team of the company, in cooperation with the employees, is ready to implement a comprehensive improvement program to reduce these costs. If you (a) consider an observation of actual overhead costs for one month analogous to an output unit, (b) estimate the overhead costs for the first month of program implementation to be 1.15Xdue to extra front-end effort, and (c) consider a 90% improvement curve applicable to the situation, what is your estimate of the percentage reduction in present overhead costs per month after 30 months of program implementation?arrow_forward
- The master budget of Knope Inc. shows that the planned activity level for next year is expected to be 25,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected: Indirect labor................................................. $720,000 Machine supplies.............................................180,000 Indirect materials.............................................210,000 Depreciation on factory building..................150,000 Total manufacturing overhead.................$1,260,000 A flexible budget for a level of activity of 30,000 machine hours would show total manufacturing overhead costs of Group of answer choices $1,260,000 $1,512,000 $1,362,000 $1,482,000arrow_forwardAssume that the moving activity has an expected cost of 80,000. Expected direct labor hours are 20,000, and expected number of moves is 40,000. The best activity for moving is a. 4 per move. b. 1.33 per hour-move. c. 4 per hour. d. 2 per move. e. e None of these.arrow_forwardCrystal Pools estimates overhead will utilize 250,000 machine hours and cost $750,000. It takes 2 machine hours per unit, direct material cost of $14 per unit, and direct labor of $20 per unit. What is the cost of each unit produced?arrow_forward
- If a factory operates at 100% of capacity one month, 90% of capacity the next month, and 105% of capacity the next month, will a different cost per unit be charged to the work-in-process account each month for factory overhead assuming that a predetermined annual overhead rate is used?arrow_forwardThe expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): 64,900 per year Variable costs (supplies): 1.35 per maintenance hour Estimated usage by: Actual usage by: Required: 1. Calculate a single charging rate for the Maintenance Department. 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments?arrow_forwardBoarders estimates overhead will utilize 160,000 machine hours and cost $80,000. It takes 4 machine hours per unit, direct material cost of $5 per unit, and direct labor of $5 per unit. What is the cost of each unit produced?arrow_forward
- Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.arrow_forwardPatterson Corporation expects to incur 70,000 of factory overhead and 60,000 of general and administrative costs next year. Direct labor costs at 5 per hour are expected to total 50,000. If factory overhead is to be applied per direct labor hour, how much overhead will be applied to a job incurring 20 hours of direct labor? a. 120 b. 260 c. 28 d. 140arrow_forwardA company estimates its manufacturing overhead will be $840,000 for the next year. What is the predetermined overhead rate given each of the following Independent allocation bases? Budgeted direct labor hours: 90,615 Budgeted direct labor expense: $750000 Estimated machine hours: 150,000arrow_forward
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