main activities and their associated cost drivers and overhead cost have been identifiedas follows:Cost driverNumber of ordersNumber of partsAssembly timeNumber of softwareapplicationsNumber of unitsProduction overhead costActivityManufacturing schedulingParts handlingAssemblySoftware installation andtestingPackaging1622,4644,4722,0001,30210,400Further details have also been ascertained as follows:Laptops Resktop PCs6,0004TabletsBudgeted production for next year (units) 10,000Average number of units per orderNumber of parts per unitAssembly time per unit (minutes).mNumber of software applications per unit.12,000610203525204030234Instructions1. Calculate the total gross profit for each product using the proposed activity-basedcosting system.2. Discuss the differences between the gross profit figures calculated in part 1compared with those calculated under the current absorption costing system.Just solve part 2. II. Wongtien Electronics Corp. in Hong Kong, SAR, China, manufactures tablets, laptopsand desktop PCs. Wongtien currently operates a standard absorption costing system.Budgeted information for next year is given below (currency in one thousand Hong KongDollars, HK$000):Desktop PCs9,8802,200800ProductsSales revenueTablets3,640800300Laptops12,4802,800Total26,0005,8002,300Direct materialDirect laborFixed productionoverheads1,4561,0844.9923.4883,9522,92810,4007,500Gross profitFixed production overheads are currently absorbed based on a percentage of salesrevenue. Wongtien is considering changing to an activity-based costing system. Themain activities and their associated cost drivers and overhead cost have been identifiedas follows:Cost driverProduction overhead costActivityManufacturing scheduling wNumber of ordersParts handlingAssemblySoftware installation andtestingPackaging162Number of partsAssembly timewNumber of softwareapplicationsNumber of units2,4644,4722,0001,30210,400Further details have also been ascertained as follows:Desktop PCs6,0004TabletsLaptops12,000Budgeted production for next year (units). 10,000Average number of units per orderNumber of parts per unitAssembly time per unit (minutes)nNumber of software applications per unit.1020352520403034Instructions

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Description: main activities and their associated cost drivers and overhead cost have been identifiedas follows:Cost driverNumber of ordersNumber of partsAssembly timeNumber of softwareapplicationsNumber of unitsProduction overhead costActivityManufacturing sche

2. The gross profit from activity based costing system is given below. Activity Tablets Laptops…

Answered: 2. Discuss the differences between the…

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2. Discuss the differences between the gross profit figures calculated in part 1 compared with those calculated under the current absorption costing system.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 9E: Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost...

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W Corp. in Hong Kong, SAR, China, manufactures tablets, laptops and desktop PCs. Wongtien currently operates a standard absorption costing system. Budgeted information for next year is given below (currency in one thousand Hong Kong Dollars, HK$000): Products Tablets Laptops Desktop PCs Total Sales revenue 3,640 12,480 9,880 26,000 Direct material 800 2,800 2,200 5,800 Direct labor 300 1,200 800 2,300 Fixed production overheads 1,456 4,992 3,952 10,400 Gross profit 1,084 3,488 2,928 7,500 Fixed production overheads are currently absorbed based on a percentage of sales revenue. W company is considering changing to an activity-based costing system. The main activities and their associated cost drivers and overhead cost have been identified as follows: Activity Cost driver…
The Sendai Co. Ltd of Japan has budgeted costs in its various departments as follows for the coming year: Factory administration ¥270.000.000 Custodial services ¥68.760.000 Personnel ¥28.840.000 Maintenance ¥45.200.000 Machining - overhead ¥376.300.000 Assembly - overhead ¥175.900.000 Total cost ¥965.000.000 The Japanese currency is the yen, denoted by ¥. The company allocates service department costs to other departments in the order listed below. Department Number of employees Total labour-hours Square feet of space occupied Direct labour-hours Machine-hours Factory administration 12 - 5.000 - - Custodial services 4 3.000 2.000 - - Personnel 5 5.000 3.000 - - Maintenance 25 22.000 10.000 - - Machining 40 30.000 70.000 20.000 70.000 Assembly 60 90.000 20.000 80.000 10.000 Total 146 150.000 110.000 100.000 80.000 Machining and Assembly are operating departments; the other departments all act in a service capacity. The company does not…
Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is 250,000 and 50,000 sales orders are estimated to be processed. a. Determine the activity rate of the sales order processing activity. b. Determine the amount of sales order processing cost associated with 30,000 sales orders.
Rahapuka Ltd is a manufacturing company which manufacturers and assembles car components. The following budgeted information relates to Rahapuka Ltd for the forth coming period. Products A1 B2 C3 '000 '000 '000 Sales and production (units) 50 40 30 N$ N$ N$ Selling price (per unit) 45 95 73 Prime costs (per unit) 32 84 65 Hours Hours Hours Machine department (machine hours per unit) 2 5 4 Assembly department (direct labour hours per unit) 7 3 2 Overheads can be re-analysed into 'cost pools' as follows; cost pool N$ '000 Cost driver Quantity for the period Machining services 357 Machine hours 420.000 Assembly services 318 Direct labour hours 530.000 Set up costs 26 Set ups 520 Order processing 158 Customer orders 32.000 Purchasing 84 Suppliers' orders 11.200 You have also been provided with the following estimates for the period A1 B2 C3 Number of set ups 120 200 200 Customer orders 8000 8000 16000 Suppliers' orders 3000 4000 4200…
Rahapuka Ltd is a manufacturing company which manufactures and assembles car components. The following budgeted information relates to Rahapuka Ltd for the forthcoming period. Products A1 B2 C3 '000 '000 '000 Sales and production (units) 50 40 30 N$ N$ N$ Selling price (per unit) 45 95 73 Prime cost (per unit) 32 84 65 Hours Hours Hours Machine department (machine hours per unit) 2 5 4 Assembly department (direct labour hours per unit) 7 3 2 Overheads can be reanalyzed into cost pools as follows: Quantity for Cost pool N$000 Cost driver the period Machining services 357 Machine hours 420 000 Assembly services 318 Direct labour hours 530 000 Set up costs 26 Set up 520 Order processing 156 Customer orders 32 000 Purchasing 84 Suppliers orders 11 200 You have also been provided with the following estimates for the period A1 B2 C3 Number of set ups 120 200 200 Customer orders 8000 8000 16000 Suppliers orders 3000 4000 4000…
4. . Micro Products Inc. has developed a very powerful electronic calculator. Each calculator requires three small “chips" that cost $2 each and are purchased from an overseas supplier. Micro Products has prepared a production budget for the calculator by quarters for year 2 and for the first quarter of year 3, as shown here: Year 3 Q1 Year 2 Q1 Q2 Q3 Q4 Required production in 60,000 units 90,000 150,000 100,000 80,000 The chip used in the production of the calculator is sometimes hard to get, so it is necessary to carry large inventories as a precaution against stock outs. For this reason, the inventory of chips at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 chips will be on hand to start the first quarter of Year 2. Purchases of raw material are paid for in the following patter: 30% paid in the quarter the purchases are made,30% paid in the following guater and the remaining 40% paid in the second following quarter of sales.…
VideoSecu produces wall mounts for flat panel television sets. Assume the forecasted income state M16-16. Special Order ment for next year is as follows. VIDEOSECU Budgeted Income Statement For the Year $5,600,000 Sales ($28 per unit) . . Cost of good sold ($19 per unit) . (3,800,000) 1,800,000 Gross profit..... Selling expenses ($5 per unit) (1,000,000) $ 800,000 Net income. ADDITIONAL INFORMATION (1) Of the production costs and selling expenses, $1,520,000 and $750,000, respectively, are fixed. (2) VideoSecu received a special order from a hospital supply company offering to buy 10,00 wall mounts for $15. If it accepts the order, there will be no additional fixed selling expenses, and there is currently sufficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $19 to make a product to sell for $15." REQUIRED Do you think the company should accept the special order? Should the decision be…
Samcor Limited manufactures tables. The following information was extracted from the budget June 2022: 1. 2. 3. 4. 5. Total production and sales Selling price per table Variable manufacturing costs per table: Direct material Direct labour Overheads Fixed manufacturing overheads Other costs: Fixed marketing and administrative costs Sales commission 2 400 units year R1 200 R288 R192 R96 R216 960 R144 000 5%
ABC corporation makes products Alpha and Beta. Both products make use of the same equipment. The following were provided to you with regard to these products in preparation for its budget for next year. Peso per unit data Alpha Alpha Beta Beta At 10,000 units At 12,500 units At 5,000 units At 8,000 units Selling price 100 100 250 250 Less: Costs 70 62 230 170 Profit 30 38 20 80 Other information are as follows: Alpha Beta Expected market demand next year 10,000 units 6,000 units Required Machine hours per unit 2 3 Total available machine hours 20,000 What is the contribution margin of Alpha if ABC was able to optimize the use of the machine hours? How many units of Beta should be produced to maximize profits?
Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is $179,400, and 13,800 orders are estimated to be processed. a. Determine the activity rate of the sales order processing activity. per sales order b. Determine the amount of sales order processing cost that Nozama.com would receive if it had 7,900 sales orders.
ABC Corporation makes products Alpha and Beta. Both products make use of the same equipment. The following was provided to you with regard to these products in preparation for its budget for next year. Peso per unit data Alpha Alpha Beta Beta At 10,000 units At 12,500 units At 5,000 units At 8,000 units Selling price 100 100 250 250 Less: Costs 70 62 230 170 Profit 30 38 20 80 Alpha Beta Expected market demand next year 10,000 units 6,000 units Required Machine hours per unit 2 3 Total available machine hours 20,000 What is the contribution margin of Alpha if ABC was able to optimize the use of the machine hours? How many units of Beta should be produced to maximize profits?
Gig Harbor Boating is the wholesale distributor of a small recreatlonal catamaran sallboat. Management has prepared the following summary data to use In its annual budgeting process: Budgeted unit sales 500 Selling price per unit Cost per unit 24 1,970 1,460 Variable selling and administrative expense (per unit) Fixed selling and administrative expense (per year) Interest expense for the year 50 $ 196,e00 $ 13,00e Requlred: Prepare the company's budgeted Income statement for the year. Gig Harbor Boating Budgeted Income Statement