Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 8, Problem 8.40P
Activity-based costing, batch-level
| Static-Budget Amounts | Actual Results | |
| Pairs of shoes shipped | 225,000 | 180,000 |
| Average number of pairs of shoes per crate | 15 | 10 |
| Packing hours per crate | 0.9 hours | 1.1 hour |
| Variable direct cost per hour | $18 | $16 |
| Fixed overhead cost | $54,000 | $56,500 |
- A. What is the static budget number of crates for 2017?
Required
- B. What is the flexible budget number of crates for 2017?
- C. What is the actual number of crates shipped in 2017?
- D. Assuming fixed overhead is allocated using crate-packing hours, what is the predetermined fixed overhead allocation rate?
- E. For variable direct batch-level costs, compute the price and efficiency variances.
- F. For fixed overhead costs, compute the spending and the production-volume variances.
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Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2017.
Estimated
Overhead
Expected Use of
Cost Drivers per Activity
Activity Cost Pools
Ordering and receiving
$73,800
12,000 orders
Food processing
420,750
55,000 machine hours
Packaging
1,365,000
420,000 labor hours
For 2017, the company had 10,000 orders and used 48,000 machine hours, and labor hours totaled 490,000.
Calculate the overhead rates for each activity. (Round answers to 2 decimal places, e.g. 12.25.)
Overhead Rates
Ordering and receiving
per order
%24
Food processing
per machine hour
2$
Packaging
per labor hour
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What is the total overhead applied?
Total overhead applied
. Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, budgeted fixed manufacturing overhead cost was $17,000,000. Budgeted variable manufacturing overhead was $10 per machine-hour. The denominator level was 1,000,000 machine-hours.
Q. Prepare a graph for fixed manufacturing overhead. The graph should display how Best Around, Inc.’s fixed manufacturing overhead costs will be depicted for the purposes of (a) planning and control and (b) inventory costing.
Crane, Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal coats.
Activity Cost Pools
Sizing and cutting
Stitching and trimming
Wrapping and packing
Sizing and cutting
Stitching and trimming
Estimated
Overhead
Wrapping and packing
$4,108,500
1,439,100
$
Compute the activity-based overhead rates using the following budgeted data for each of the activity cost pools. (Round answers to 2
decimal places, e.g. 12.25.)
$
LA
325,500
$
Estimated Use of
Cost Drivers per Activity
166,000 machine hours
78,000 labor hours
35,000 finished units
Activity-based overhead rates
per machine hour
per labor hour
per finished unit
Chapter 8 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 8 - How do managers plan for variable overhead costs?Ch. 8 - How does the planning of fixed overhead costs...Ch. 8 - How does standard costing differ from actual...Ch. 8 - What are the steps in developing a budgeted...Ch. 8 - What are the factors that affect the spending...Ch. 8 - Assume variable manufacturing overhead is...Ch. 8 - Describe the difference between a direct materials...Ch. 8 - What are the steps in developing a budgeted fixed...Ch. 8 - Why is the flexible-budget variance the same...Ch. 8 - Explain how the analysis of fixed manufacturing...
Ch. 8 - Provide one caveat that will affect whether a...Ch. 8 - The production-volume variance should always be...Ch. 8 - What are the variances in a 4-variance analysis?Ch. 8 - Overhead variances should be viewed as...Ch. 8 - Describe how flexible-budget variance analysis can...Ch. 8 - Each of the following statements is correct...Ch. 8 - Steed Co. budgets production of 150,000 units in...Ch. 8 - As part of her annual review of her companys...Ch. 8 - Culpepper Corporation had the following...Ch. 8 - Fordham Corporation produces a single product. The...Ch. 8 - Variable manufacturing overhead, variance...Ch. 8 - Fixed manufacturing overhead, variance analysis...Ch. 8 - Variable manufacturing overhead variance analysis....Ch. 8 - Fixed manufacturing overhead variance analysis...Ch. 8 - Manufacturing overhead, variance analysis. The...Ch. 8 - 4-variance analysis, fill in the blanks. ProChem...Ch. 8 - Straightforward 4-variance overhead analysis. The...Ch. 8 - Straightforward coverage of manufacturing...Ch. 8 - Overhead variances, service sector. Meals Made...Ch. 8 - Total overhead, 3-variance analysis. Pampered...Ch. 8 - Production-volume variance analysis and...Ch. 8 - Overhead variances, service setting. Carlyle...Ch. 8 - Identifying favorable and unfavorable variances....Ch. 8 - Flexible-budget variances, review of Chapters 7...Ch. 8 - Comprehensive variance analysis. Cooking Whiz...Ch. 8 - Journal entries (continuation of 8-35). A. Prepare...Ch. 8 - Graphs and overhead variances. Best Around, Inc.,...Ch. 8 - Overhead variance, missing information. Consider...Ch. 8 - Flexible budgets, 4-variance analysis. (CMA,...Ch. 8 - Activity-based costing, batch-level variance...Ch. 8 - Overhead variances and sales-volume variance. The...Ch. 8 - Activity-based costing, batch-level variance...Ch. 8 - Comprehensive review of Chapters 7 and 8, working...Ch. 8 - Review of Chapters 7 and 8, 3-variance analysis....Ch. 8 - Nonfinancial variances. Kathys Kettle Potato Chips...Ch. 8 - Overhead variances, service sector. Cavio is a...Ch. 8 - Direct-cost and overhead variances, income...Ch. 8 - Overhead variances, ethics. Carpenter Company uses...
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