MANAGERIAL ACCOUNTING CONNECT ACCESS <C>
5th Edition
ISBN: 9781264191635
Author: Noreen
Publisher: MCG CUSTOM
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Textbook Question
Chapter 5A, Problem 5A.2E
Time-Driven Activity-Based Costing LO5—7
Refer to the data in Exercise 5A—1. In addition, assume that Saratoga Company provided the following activity data for all jobs produced during the year:
Required:
- Calculate Saratoga’s used capacity in minutes.
- Calculate Saratoga’s unused capacity in minutes.
- Calculate Saratoga’s unused capacity in number of employees. (Do not round your answer to a whole number.)
- Calculate the impact on expenses of matching capacity with demand. (Be sure to round your potential adjustment in the number of employees to a whole number.)
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Activity Based Costing - practice problem
Fontillas Instrument, Inc. manufactures two products: missile range instruments and
space pressure gauges. During April, 50 range instruments and 300 pressure gauges
were produced, and overhead costs of $89,500 were estimated. An analysis of
estimated overhead costs reveals the following activities.
Activities
1. Materials handling
2. Machine setups
Cost Drivers
Number of requisitions
Number of setups
Total cost
$35,000
27,500
3. Quality inspections
Number of inspections
27,000
$89.500
The cost driver volume for each product was as follows:
Cost Drivers
Instruments
Gauge
Total
Number of requisitions
400
600
1,000
Number of setups
200
300
500
Number of inspections
200
400
600
Insructions
(a) Determine the overhead rate for each activity.
(b) Assign the manufacturing overhead costs for April to the two products using
activity-based costing.
Bodhi Company has three cost pools and two doggie products (leashes and collars). The activity cost pool
of ordering has the cost drive of purchase orders. The activity cost pool of assembly has a cost driver of
parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data
relative to those cost drivers is as follows:
Expected Use of
Estimated
Cost Drivers by Product
Cost Drivers
Overhead
Leashes
Collars
Purchase orders
$260,000
70,000
60,000
Parts
400,000
300,000
500,000
Labor hours
300,000
15,000
10,000
$960,000
Instructions: (a) Compute the activity-based overhead rates. (b) Compute the costs assigned to leashes
and collars for each activity cost pool. (c) Compute the total costs assigned to each product.
Chapter 5A Solutions
MANAGERIAL ACCOUNTING CONNECT ACCESS <C>
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- Torre Corporation incurred the following transactions. 1. Purchased raw materials on account $46,300. 2. Raw Materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials. 3. Factory labor costs incurred were $55,900, of which $51,000 pertained to factory wages payable and $4,900 pertained to employer payroll taxes payable. 4. Time tickets indicated that $50,000 was direct labor and $5,900 was indirect labor. 5. Overhead costs incurred on account were $80,500. 6. Manufacturing overhead was applied at the rate of 150% of direct labor cost. 7. Goods costing $88,000 were completed and transferred to finished goods. 8. Finished goods costing $75,000 to manufacture were sold on account for $103,000. Instructions Journalize the transactions.arrow_forwardChapter 15 Assignment of direct materials, direct labor and manufacturing overhead Stine Company uses a job order cost system. During May, a summary of source documents reveals the following. Job Number Materials Requisition Slips Labor Time Tickets 429 430 $2,500 3,500 $1,900 3,000 431 4,400 $10,400 7,600 $12,500 General use 800 1,200 $11,200 $13,700 Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Instructions Prepare summary journal entries to record (i) the requisition slips, (ii) the time tickets, (iii) the assignment of manufacturing overhead to jobs,arrow_forwardSolve accarrow_forward
- Solve fastarrow_forwardAssume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Crane can use the released productive resources to generate additional income of $375,000. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Direct materials Direct labor Variable overhead 1A Fixed overhead Opportunity cost Purchase price Totals Make A Buy $ SA Net Income Increase (Decrease) $ Based on the above assumptions, indicate whether the offer should be accepted or rejected? The offerarrow_forwardThe following is a list of balances relating to Phiri Properties Ltd during 2024. The company maintains a memorandum debtors and creditors ledger in which the individual account of customers and suppliers are maintained. These were as follows: Debit balance in debtors account 01/01/2024 66,300 Credit balance in creditors account 01/01/2024 50,600 Sunday credit balance on debtors ledger Goods purchased on credit 724 257,919 Goods sold on credit Cash received from debtors Cash paid to suppliers Discount received Discount allowed Cash purchases Cash sales Bad Debts written off Interest on overdue account of customers 323,614 299,149 210,522 2,663 2,930 3,627 5,922 3,651 277 Returns outwards 2,926 Return inwards 2,805 Accounts settled by contra between debtors and creditors ledgers 1,106 Credit balances in debtors ledgers 31/12/2024. 815 Debit balances in creditors ledger 31/12/2024.698 Required: Prepare the debtors control account as at 31/12/2024. Prepare the creditors control account…arrow_forward
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