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 stating the first-stage allocations of
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 overheads and the activity, the management has to ascertain the activity rate for that specific activity.
Requirement 2:
Calculate the activity rate for the given cost activity 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 overheads and the activity, the management has to ascertain the activity rate for that specific activity.
Requirement 3:
Calculate the cost of completing a 5 hundred square foot carpet-cleaning job.
Concept introduction:
Income statement:
The income statement tells about the revenues earned and expenses incurred by the company in a specific period of time. It is also known as operations statement, earnings statement, revenue statement or profit, and loss statement.
Requirement 4:
Calculate the customer margin for the given job.
Concept introduction:
Unit-level activities:
The activities that are carried out at the time of the production of each unit are considered as unit-level activities. The unit-level cost should be proportional to the number of units produced.
Requirement 5:
Provide a conclusion about the profitability of the Flying N ranch job.
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 6:
Provide recommendations regarding the pricing jobs in the future.
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Chapter 5 Solutions
MANAGERIAL ACCOUNTING F/MGRS.
- Novus Advisory Group expects its consultants to work 40,000 direct labor hours per year. The company's estimated total indirect costs are $360,000. The direct labor rate is $95 per hour. The company uses direct labor hours as the allocation base for indirect costs. If Novus performs a job requiring 30 hours of direct labor, what is the total job cost?arrow_forwardTONY Corporation makes a product whose direct labor standard are 1.3 hours per unit and $14 per hour. In April, the company produced 5,400 units using 7,440 direct labor hours. The actual direct labor cost was $97,550. The labor rate variance for April is _.arrow_forwardMeryl Manufacturing had a Work-in-Process balance of $168,000 on January 1, 2023. The year-end balance of Work-in-Process was $192,000, and the Cost of Goods Manufactured was $745,000. Use this information to determine the total manufacturing costs incurred during the fiscal year 2023.arrow_forward
- I am searching for the accurate solution to this general accounting problem with the right approach.arrow_forwardPlease provide the accurate solution to this financial accounting question using valid calculations.arrow_forwardCan you explain this general accounting question using accurate calculation methods?arrow_forward
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