Connect 2-Semester Access Card for Fundamental Accounting Principles
22nd Edition
ISBN: 9780077632755
Author: John Wild
Publisher: McGraw-Hill Education
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Chapter C, Problem 8DQ
To determine
Introduction:
Activity Based Costing
• Activity Based Costing is a method of cost allocation, whereby costs are assigned to activities performed and cost per unit of activity driver is calculated and assigned to units of activities performed.
• Activity drivers could be cost allocation units such as orders, batches, area occupied etc. Activity based costing favors cost allocation on the actual units of activity carried out as opposed to the standard method of
To Determine:
Cost pools for activity based costing in most organizations
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Students have asked these similar questions
What is the estimated total fixed cost ?
Reciprocal Method
Eilers Company has two producing departments and two support departments. The following budgeted data pertain to
these four departments:
Support Departments
Producing Departments
General
Factory
Receiving
Assembly
Finishing
Direct overhead
$400,000
$150,000
$45,000
$71,000
Square footage
2,700
5,400
5,400
Number of receiving orders
300
1,680
1,020
Direct labor hours
25,000
40,000
Required:
1. Allocate the overhead costs of the support departments to the producing departments using the reciprocal method.
(Round allocation ratios to two decimal places. Round allocated costs to the nearest dollar. If an amount is zero, enter
"0".)
Allocation ratios:
Square footage
General Factory Receiving Assembly Finishing
0
0
Number of receiving orders
0.10
0
0.56
0.34
Allocations:
Direct overhead cost
General Factory
Receiving
Total
General Factory Receiving Assembly Finishing
$
$
$
$
400,000
150,000
45,000
71,000
$
$
$
$
2. Using direct labor hours, compute departmental overhead…
?!
Chapter C Solutions
Connect 2-Semester Access Card for Fundamental Accounting Principles
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- Windsor Fabrication estimates its manufacturing overhead to be $720,000 and its direct labor costs to be $600,000 for year 5. Windsor worked three jobs for the year. Job 5-1, which was sold during year 5, had actual direct labor costs of $180,000. Job 5-2, which was completed but not sold at the end of the year, had actual direct labor costs of $270,000. Job 5-3, which is still in work-in-process inventory, had actual direct labor costs of $150,000. The actual manufacturing overhead for year 5 was $700,000. Manufacturing overhead is applied on the basis of direct labor costs. a) How much overhead was applied to each job in year 5? b) What was the over- or underapplied manufacturing overhead for year 5?arrow_forwardWhat amount of net sales must Trevino have recorded in 2023 ?arrow_forwardPlease provide the correct answer to this general accounting problem using accurate calculations.arrow_forward
- Horngren's Financial & Managerial Accounting: The Managerial Chapters, 8th Edition. E-M:9-16 Using responsibility reports to evaluate cost, revenue, and profit centers The accountant for a subunit of Bellamy Sports Company went on vacation before completing the subunit’s monthly responsibility report. This is as far as she got: Subunit X Revenue by Product Actual Results Flexible Budget Variance F or U Flexible Budget Sales Volume Variance F or U Static Budget Downhill-RI $ 326,000 (a) (b) $ 19,000 F $ 301,000 Downhill-RII $ 154,000 (c) $ 164,000 (d) $ 148,000 Cross-EXI $ 280,000 $ 1,000 U $ 281,000 (e) $ 297,000 Cross-EXII $ 254,000 (f) $ 249,000 $ 16,500 U $ 265,500 Snow-LXI $ 424,000 $ 2,000 F (g) (h) $…arrow_forwardCan you explain the process for solving this financial accounting problem using valid standards?arrow_forwardI need guidance with this general accounting problem using the right accounting principles.arrow_forward
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