Stand-alone Cost Allocation Method: The stand-alone cost allocation method is a method of common cost allocation which uses the information that relates to each user of a cost object as a separate entity to determine the cost-allocation weights. To determine: The allocation of revenue from the computer bundle purchased to each hardware products based on the individual selling price per unit.

Question

Stand-alone revenue allocation. Magic Systems, Inc., sells computer hardware to end consumers. The CX30 is sold as a “bundle,” which includes three hardware products: a personal computer (PC) tower, a 26-inch monitor, and a color laser printer. Each of these products is made in a separate manufacturing division of Magic Systems and can be purchased individually as well as in a bundle. Magic Systems sells roughly equal quantities of the three products. The individual selling prices and per unit costs are as follows:

Answer 1

Question

Chapter 15, Problem 15.33P

1.

To determine

Stand-alone Cost Allocation Method:

The stand-alone cost allocation method is a method of common cost allocation which uses the information that relates to each user of a cost object as a separate entity to determine the cost-allocation weights.

To determine: The allocation of revenue from the computer bundle purchased to each hardware products based on the individual selling price per unit.

2.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by a stand-alone method based on cost per unit.

3.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by stand-alone method based on physical units.

4.

To determine

To explain: The basis of allocation which is most sensible in this situation.

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Stand-alone revenue allocation. Magic Systems, Inc., sells computer hardware to end consumers. The CX30 is sold as a “bundle,” which includes three hardware products: a personal computer (PC) tower, a 26-inch monitor, and a color laser printer. Each of these products is made in a separate manufacturing division of Magic Systems and can be purchased individually as well as in a bundle. Magic Systems sells roughly equal quantities of the three products. The individual selling prices and per unit costs are as follows:

The Dodson Company manufactures and distríbutes three types of electronic products, Zymol, Zybat and Zycot. The following details the unit sales, selling prices and manufacturing costs of the three electronic devices: Zymol $100 Zybat $120 Zycot $180 Sales Price Manufacturing Cost $60 $80 $110 Number ofunits sold 15,000 13,000 12,000 Selling, general and administrative(SG&A) expenses are $1,170,000. SG&Aexpenses are currently being allocated based upon sales revenue for the three products. The Dodson Companyis considering allocating SG&A expenses underan activity based costing methodology as follows: Upon further investigation of the SG&A expenses, (50 percent) are shown to be for marketing and advertising. Each product has its own advertising and marketing budget, administered by one of the three marketing managers. Zycot, the premier product, is advertisedheavily. Sixty percent of the marketing and advertising budget goes toward Zycot, twenty percent to Zymol and twenty percent to…

Diversified Industries manufactures sump-pumps. Its most popular product is called the Super Soaker, which has a retail price of $1,200 and costs $540 to manufacture. It sells the Super Soaker on a standalone basis directly to businesses. Diversified also provides installation services for these commercial customers, who want an emergency pumping capability (with regular and back-up generator power) at their businesses. Diversified also distributes the Super Soaker through a consignment agreement with Menards. Income data for the first quarter of 2017 from operations other than the Super Soaker are as follows. Revenues $9,500,000 Expenses 7,750,000 Diversified has the following information related to two Super Soaker revenue arrangements during the first quarter of 2017.1. Diversified sells 30 Super Soakers to businesses in flood-prone areas for a total contract price of $54,600. In addition to the pumps, Diversified also provides installation (at a cost of $150 per pump). On a…

Answer 2

Question

Chapter 15, Problem 15.33P

1.

To determine

Stand-alone Cost Allocation Method:

The stand-alone cost allocation method is a method of common cost allocation which uses the information that relates to each user of a cost object as a separate entity to determine the cost-allocation weights.

To determine: The allocation of revenue from the computer bundle purchased to each hardware products based on the individual selling price per unit.

2.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by a stand-alone method based on cost per unit.

3.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by stand-alone method based on physical units.

4.

To determine

To explain: The basis of allocation which is most sensible in this situation.

Expert Solution & Answer

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Answer 3

Question

Chapter 15, Problem 15.33P

1.

To determine

Stand-alone Cost Allocation Method:

The stand-alone cost allocation method is a method of common cost allocation which uses the information that relates to each user of a cost object as a separate entity to determine the cost-allocation weights.

To determine: The allocation of revenue from the computer bundle purchased to each hardware products based on the individual selling price per unit.

2.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by a stand-alone method based on cost per unit.

3.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by stand-alone method based on physical units.

4.

To determine

To explain: The basis of allocation which is most sensible in this situation.

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Answer 4

Question

Chapter 15, Problem 15.33P

1.

To determine

Stand-alone Cost Allocation Method:

The stand-alone cost allocation method is a method of common cost allocation which uses the information that relates to each user of a cost object as a separate entity to determine the cost-allocation weights.

To determine: The allocation of revenue from the computer bundle purchased to each hardware products based on the individual selling price per unit.

2.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by a stand-alone method based on cost per unit.

3.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by stand-alone method based on physical units.

4.

To determine

To explain: The basis of allocation which is most sensible in this situation.

Expert Solution & Answer

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Answer 5

Chapter 15, Problem 15.33P

1.

To determine

Stand-alone Cost Allocation Method:

The stand-alone cost allocation method is a method of common cost allocation which uses the information that relates to each user of a cost object as a separate entity to determine the cost-allocation weights.

To determine: The allocation of revenue from the computer bundle purchased to each hardware products based on the individual selling price per unit.

2.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by a stand-alone method based on cost per unit.

3.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by stand-alone method based on physical units.

4.

To determine

To explain: The basis of allocation which is most sensible in this situation.

Answer 6

Chapter 15, Problem 15.33P

1.

To determine

Stand-alone Cost Allocation Method:

The stand-alone cost allocation method is a method of common cost allocation which uses the information that relates to each user of a cost object as a separate entity to determine the cost-allocation weights.

To determine: The allocation of revenue from the computer bundle purchased to each hardware products based on the individual selling price per unit.

Answer 7

Chapter 15, Problem 15.33P

1.

To determine

Stand-alone Cost Allocation Method:

The stand-alone cost allocation method is a method of common cost allocation which uses the information that relates to each user of a cost object as a separate entity to determine the cost-allocation weights.

To determine: The allocation of revenue from the computer bundle purchased to each hardware products based on the individual selling price per unit.

Answer 8

2.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by a stand-alone method based on cost per unit.

Answer 9

2.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by a stand-alone method based on cost per unit.

Answer 10

3.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by stand-alone method based on physical units.

Answer 11

3.

To determine

The allocation of revenue from the computer bundle purchased to each hardware products by stand-alone method based on physical units.

Answer 12

4.

To determine

To explain: The basis of allocation which is most sensible in this situation.

Answer 13

4.

To determine

To explain: The basis of allocation which is most sensible in this situation.

Answer 14

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Ch. 15 - Prob. 15.1Q Ch. 15 - Describe how the dual-rate method is useful to...Ch. 15 - How do budgeted cost rates motivate the...Ch. 15 - Give examples of allocation bases used to allocate...Ch. 15 - Why might a manager prefer that budgeted rather...Ch. 15 - To ensure unbiased cost allocations, fixed costs...Ch. 15 - Prob. 15.7Q Ch. 15 - What is conceptually the most defensible method...Ch. 15 - Distinguish between two methods of allocating...Ch. 15 - What are the challenges of using the incremental...

Solution Summary: The author explains the stand-alone cost allocation method, which uses the information that relates to each user of a cost object as an entity to determine the cost allocation weights.

The allocation of revenue from the computer bundle purchased to each hardware products by a stand-alone method based on cost per unit.

The allocation of revenue from the computer bundle purchased to each hardware products by stand-alone method based on physical units.

To explain: The basis of allocation which is most sensible in this situation.

Chapter 15 Solutions