Concept introduction:
First stage allocations:
The financial statement of the company classifies the cost department wise. Therefore, it is necessary to allocate the cost to different activities in order to build a relationship between the activity and the costing.
Requirement 1:
Prepare a report showing the first-stage allocation of the costs to the activity cost pools.
Concept introduction:
Activity rate:
The activity rate is determined by dividing the net activity cost, with the total number of activities. The calculation of the activity rate is the second step in the implementation of activity-based costing. After establishing the relationship between the
Requirement 2:
Calculate the activity rate for the given activity cost pools.
Concept introduction:
Activity-based costing (ABC):
Activity-based costing refers to the method of costing where the overhead cost is assigned to various products. This costing method identifies the relationship between the
Requirement 3:
Calculate the total cost and the average cost of the given jobs.
Concept introduction:
Activity-based costing (ABC):
Activity-based costing refers to the method of costing where the overhead cost is assigned to various products. This costing method identifies the relationship between the manufacturing overhead costs and the activities. After establishing the relationship, the indirect cost is allocated to the products.
Requirement 4:
Explain whether the present policy of binding of jobs is reasonable.
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Chapter 5 Solutions
MANAGERIAL ACCOUNTING FOR MANAGERS
- Summit Enterprises had sales of $980,000. The beginning accounts receivable balance was $78,000, and the ending accounts receivable balance was $240,000. How much is the cash collected from customers for this reporting period? (1) $818,000 (2) $1,142,000 (3) $950,000 (4) $730,000arrow_forwardWhat is the largest possible total contribution marginarrow_forwardSterling Manufacturing had a quick ratio of 1.5, a current ratio of 3.2, an inventory turnover ratio of 6, total current assets of $900,000, and cash and equivalents of $150,000 in 2020. If the cost of goods sold equaled 85% of sales, what were Sterling's annual sales and days' sales outstanding (DSO)?arrow_forward
- How much sales increase before it is required to increasearrow_forwardWhat is the overhead allocation rate?arrow_forwardOn May 1st, Golden Harvest, Inc. purchased $1,500 worth of supplies on account. On December 31st, the fiscal year-end for Golden Harvest, it is determined that $800 worth of supplies still remain. What is the balance in the supplies account after adjustment?arrow_forward
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