Cost driver: Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product. Activity Based Costing: Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products. Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product. Given information: Machine hours for product M is 25,000 hours Machine hours for product F is 50,000 hours Total machining cost is $375,000. Total machine hours are 75,000 hours. Production runs for product M is 50. Production runs for product F is 50. Total setup costs are $120,000. Inspection hours for product M are 1,000 hours. Inspection hours for product F are 500 hours. Total inspection cost is $105,000.

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Answer 1

Question

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

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During its first month of operation, Peter's Auto Supply Corporation, which specializes the sale of auto equipment and supplies, completed the following transactions. July Transactions July 1 Issued Common Stock in exchange for $100,000 cash. July 1 Paid $4,000 rent for the months of July and August July 2 Paid the insurance company $2,400 for a one year insurance policy, beginning July 1. July 5 Purchased inventory on account for $35,000 (Assume that the perpetual inventory system is used.) July 6 Borrowed $36,500 from a local bank and signed a note. The interest rate is 10%, and principal and interest is due to be repaid in six months. July 8 Sold inventory on account for $17,000. The cost of the inventory is $7,000. July 15 Paid employees $6,000 salaries for the first half of the month. July 18 Sold inventory for $15,000 cash. The cost of the inventory was $6,000. July 20 Paid $15,000 to suppliers for the inventory purchased on January 5. July 26…

General Accounting Question 2.1

General Accounting

Answer 2

Question

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

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Answer 3

Question

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

Expert Solution & Answer

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Answer 4

Question

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

Expert Solution & Answer

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Answer 5

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

Answer 6

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

Answer 7

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

Answer 8

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

Answer 9

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

Answer 10

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

Answer 11

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 5 - What is broad averaging, and what consequences can...Ch. 5 - Why should managers worry about product...Ch. 5 - What is costing system refinement? Describe three...Ch. 5 - What is an activity-based approach to designing a...Ch. 5 - Describe four levels of a cost hierarchy.Ch. 5 - Why is it important to classify costs into a cost...Ch. 5 - What are the key reasons for product cost...Ch. 5 - Prob. 5.8Q Ch. 5 - Department indirect-cost rates are never...Ch. 5 - Prob. 5.10Q

To define: The use of new cost information from its activity based costing system to manage its business.

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Chapter 5 Solutions