Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and individual home owners. One of the services AHC offers is delivery of the purchased products to the customer's work site. Because not all customers take advantage of the delivery service option, ACH adds 10 percent to the cost of the products purchased to cover the delivery cost. A business intern spent the summer at ACH. The intern's assignment was to analyze the delivery service and recommend a better way to charge customers for using it. The intern, who had studied activity-based costing, identified the following activities and the data related to them: Activity Picking order Delivering order Handling complaints Total delivery cost Cost Driver Number of items Number of orders Number of complaints Total order value (before delivery charge) Number of orders Annual Cost $ 321,640 850,500 29,440 $ 1,201,580 The intern selected two customers, who were frequent customers, to use as an illustration of the system: Wagner Remodeling and Burlington Contractors. The intern collected the following information on these two customers for the most recent six months: Total number of items Number of delivery complaints Wagner Remodeling $ 16,500 Annual Driver Volume 365,500 items 31,500 orders 115 complaints 23 342 1 Burlington Contractors $ 21,000 58 313 2 Required: a. What would the delivery charge for each customer be under the current policy of 10 percent of order value? b. What would the activity-based costing system estimate as the cost of delivering to each customer?

Rene is working with the operations manager to determine what the standard labor cost is for a spice chest. He has watched the process from start to finish and taken detailed notes on what each employee does. The fırst employee selects and mills the wood, so it is smooth on all four sides. This takes the employee 1 hour(s) for each chest. The next employee takes the wood and cuts it to the proper size. This takes 32 minutes. The next employee assembles and sands the chest. Assembly takes 3 hour(s). The chest then goes to the finishing department. It takes 3 hour(s) to finish the chest. All employees are cross-trained so they are all paid the same amount per hour, $18.62. What is the standard cost per chest for labor? Round to the nearest penny, two decimal places.

Free Wheels has a plant that assembles bicycles. The plant currently has a small cafeteria for the workers but the kitchen equipment is in need of a substantial overhaul. Free Wheels has been offered a contract by Beasteats to supply food to the workers. The particulars of the situation are shown in the table. Should Free Wheels continue with the in-house food services or contract the services to Beasteats? (Hint: Create a table with the columns for year (for 0-8 years), In-house current cost, contract current cost, in-house PW, and contract PW). Food Service: In-House Versus Contract Food service labour (hours/year) Wage rate (real, time 1, $/hour) Overhead cost (real, time 1, S/year) Kitchen equipment first cost (current, time 0, S) Contract cost, years 1 to 3 (current S) Contract cost, years 4 to 6 (current S) Current dollar MARR Expected annual inflation rate Study period (years) 6000 15 18 000 25 000 55 000 63 700 22% 5% 6

Ye Old Bump and Grind  inc is an automobile body and fender repair shop. repair work is done by hand and with the use of small tools. Customers are billed based on time (direct labor hours) and materials used in each repair job. The shops overhead costs consist of primaily of indirect materials(welding materials, metal putty and sandpaper), rent, indirect labor and utilities. Rent is equal to a percentage of the shops gross revenue for each month. The indirect labor relates primarily to ordering parts and processing insurance claims. The amount of indirect labor, therefore, tends to vary with the size of each job. Harvy Lee,manager of the business, is considering using either direct labor hours or number of repair jobs as the basis for allocating overhead costs. He has estimated the following amounts for the coming year: Estimated total overhead $123,000 Estimated direct labor hours 10,000 Estimated number of repair jobs 300 a. (1) - Compute the overhead application rate…

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Noteworthy, Incorporated, produces and sells small electronic keyboards. Assume that you have the following information about Noteworthy's costs for the most recent month. Depreciation on factory equipment Depreciation on CEO's company car Speakers used in the keyboard Production supervisor's salary Glue and screws used in the keyboards Cost to run an ad on local radio stations Wages of persons who install the speakers $ 820 180 1,140 2,370 250 2,970 Utilities for the factory Personnel manager's salary Wages of person who attaches legs to keyboards Required: 1. Calculate the total product cost for Noteworthy. 2. Calculate the prime cost for Noteworthy. 3. Calculate the manufacturing overhead for Noteworthy. 4. Calculate the direct labor for Noteworthy. 5. Calculate the conversion cost for Noteworthy. 650 1,250 2,640 2,070 6. Calculate the total variable cost (with number of units produced as the activity) for Noteworthy. 7. Calculate the total fixed cost (with number of units produced…

Marine Components produces parts for airplanes and ships. The parts are produced to specification by their customers, who pay either a fixed price (the price does not depend directly on the cost of the job) or price equal to recorded cost plus a fixed fee (cost plus). For the upcoming year (year 2), Marine expects only two clients (client 1 and client 2). The work done for client 1 will all be done under fixed-price contracts while the work done for client 2 will all be done under cost-plus contracts.   The controller at Marine Components chose direct labor cost as the allocation base in year 2, based on what she considered reflected the relation between overhead and direct labor cost. Year 3 is approaching and again the company only expects two clients: client 1 and client 3. Work for client 1 will continue to be billed using fixed-price contracts, and client 3 will be billed based on cost-plus contracts.   Manufacturing overhead for year 3 is estimated to be $18 million. Other…

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The following data set is used for S5-14 through S5-18: Crystal Springs Data Set: Filtration Department Crystal Springs produces premium bottled water. Crystal Springs purchases artesian water, stores the water in large tanks, and then runs the water through two processes: • Filtration, where workers microfilter and ozonate the water • Bottling, where workers bottle and package the filtered water During May, the filtration process incurs the following costs in processing 205,000 liters: Wages of workers operating the filtration equipment.... Wages of workers operating ozonation equipment... Manufacturing overhead allocated to filtration. Water...... $ 10,280 $ 11,500 $ 25,500 $118,900 Crystal Springs has no beginning inventory in the Filtration Department. • your spinigs nee in veyinmy menseny i ime i mison exp S5-14 Compute cost per liter (Learning Objective 1) Refer to the Crystal Springs Filtration Department Data Set. 1. Compute the May conversion costs in the Filtration…

Taylor Inc. produces summer dresses for women. Their dresses are made of cotton fabrics. The line workers are paid an hourly wage and the production supervisor is paid an annual salary. The products are tested for quality control by an independent party which charges a set price per month and an additional charge for each item tested. Which of the following items should be classified as a fixed cost? Group of answer choices Line workers’ wages Production supervisor’s salary Cotton fabrics Quality control costs