3-28 Activity-Based Costing Hakara Company has been using direct labor costs as the basis forassigning overhead to its many products. Under this allocation system, product A has been assignedoverhead of $10.80 per unit, while product B has been assigned $3.60 per unit. Management feels thatan ABC system will provide a more accurate allocation of the overhead costs and has collected thefollowing cost pool and cost driver information:[LO 5-2, 5-3]Cost PoolsActivity CostsCost DriversActivity Driver Consumption4,00020,00040,000Machine setupSetup hoursPounds of materials$360,000Materials handlingElectric power100,00040,000Kilowatt-hoursThe following cost information pertains to the production of A and B, just two of Hakara's manyproducts:ANumber of units produced4,000$42,000$24,00020,000$54,000$40,000Direct materials costDirect labor costNumber of setup hours400200Pounds of materials used1,0002,0003,0004,000Kilowatt-hoursRequired1. Use activity-based costing to determine a unit cost for each product.2. Comment on management's belief that the ABC system will generate an overhead allocation that ismore accurate than the volume-based system currently in use.

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Description: 3-28 Activity-Based Costing Hakara Company has been using direct labor costs as the basis forassigning overhead to its many products. Under this allocation system, product A has been assignedoverhead of $10.80 per unit, while product B has been assi

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as Activity-Based Costing Hakara Company has been using direct labor costs assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $10.80 per unit, while product B has been assigned $3.60 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Activity Costs Cost Drivers Activity Driver Consumption Machine setup Materials handling Electric power $360,000 100,000 40,000 Setup hours Pounds of materials 4,000 20,000 40,000 Kilowatt-hours The following cost information pertains to the production of A and B, just two of Hakara's many products: A B Number of units produced 4,000 $42,000 $24,000 20,000 $54,000 $40,000 Direct materials cost Direct labor cost Number of setup hours Pounds of materials used 400 200 1,000 2,000 3,000 4,000 Kilowatt-hours red e activity-based costing to determine a unit cost for each product. mment on management's belief that the ABC system will generate an over

as Activity-Based Costing Hakara Company has been using direct labor costs assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $10.80 per unit, while product B has been assigned $3.60 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Activity Costs Cost Drivers Activity Driver Consumption Machine setup Materials handling Electric power $360,000 100,000 40,000 Setup hours Pounds of materials 4,000 20,000 40,000 Kilowatt-hours The following cost information pertains to the production of A and B, just two of Hakara's many products: A B Number of units produced 4,000 $42,000 $24,000 20,000 $54,000 $40,000 Direct materials cost Direct labor cost Number of setup hours Pounds of materials used 400 200 1,000 2,000 3,000 4,000 Kilowatt-hours red e activity-based costing to determine a unit cost for each product. mment on management's belief that the ABC system will generate an over

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 21E: Refer to the data in Exercise 7.20. The company has decided to use the sequential method of...

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Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Refer to the data in Exercise 7.20. The company has decided to use the sequential method of allocation instead of the direct method. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the overhead costs to the producing departments using the sequential method. (Take allocation ratios out to four significant digits. Round allocated costs to the nearest dollar.) 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.)
Question No.6 Hunter Company manufactures two products (XX and YY). The overhead costs have been divided into four cost pools that use the following activity drivers. Product Number of Orders Number of Set-ups Number of Labor Transactions Labor Hours XX YY Cost per pool 60 20 Rs.16,000 20 80 Rs.13,000 50 70 Rs.2,400 2,000 500 Rs.20,000 Required: Compute the allocation rates for each of the activity drivers listed. Allocate the overhead costs to product XX and product YY using activity-based costing. Compute the overhead rate using machine hours under the functional-based costing system. Allocate the overhead cost to Product XX and YY using the functional-based costing system overhead rate calculated in part C.
Question No.5 Hunter Company manufactures two products (XX and YY). The overhead costs have been divided into four cost pools that use the following activity drivers. Product Number of Orders Number of Set-ups Number of Labor Transactions Labor Hours XX YY Cost per pool 60 20 Rs.16,000 20 80 Rs.13,000 50 70 Rs.2,400 2,000 500 Rs.20,000 Required: Compute the allocation rates for each of the activity drivers listed. Allocate the overhead costs to product XX and product YY using activity-based costing. Compute the overhead rate using machine hours under the functional-based costing system. Allocate the overhead cost to Product XX and YY using the functional-based costing system overhead rate calculated in part ©.
Question No.5 Ivory Corporation manufactures two products (A and B). The overhead costs have been divided into four cost pools that use the following activity drivers: Product Number of Orders Number of Set-ups Number of Labor Transactions Labor Hours A B Cost per pool 20 5 Rs.15,000 35 70 Rs.8,400 1,000 1,500 Rs.120,000 75 125 Rs.40,000 Required: Compute the allocation rates for each of the activity drivers listed. Allocate the overhead cost to Product A and B using activity-based-costing. Compute the overhead rate using machine hours under the functional based costing system. Allocate the overhead cost to Product A and B using the functional-based costing system overhead rate calculated in part C.
Saved Help Sav CH 07 i Klumper Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system cont following six activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Machine processing Machine setups Activity Rates $6 per direct labor-hour $ 4 per machine-hour $ 50 per setup $ 90 per order $ 14 per shipment $ 840 per product Production orders Shipments Product sustaining Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year Direct labor-hours 200 2,000 80 500 Machine-hours Machine setups Production orders 100 1,500 1 4 4 Shipments Product sustaining 1 10 1 Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system? DELL F3 prt sc home end F4 F5 F6
Activity-Based Costing Hakara Company has been using direct labor costs as the basis forassigning overhead to its many products. Under this allocation system, product A has been assignedoverhead of $10.80 per unit, while product B has been assigned $3.60 per unit. Management feels thatan ABC system will provide a more accurate allocation of the overhead costs and has collected thefollowing cost pool and cost driver information:Cost Pools Activity Costs Cost Drivers Activity Driver ConsumptionMachine setup $360,000 Setup hours 4,000Materials handling 100,000 Pounds of materials 20,000Electric power 40,000 Kilowatt-hours 40,000The following cost information pertains to the production of A and B, just two of Hakara’s manyproducts:A BNumber of units produced 4,000 20,000Direct materials cost $42,000 $54,000Direct labor cost $24,000 $40,000Number of setup hours 400 200Pounds of materials used 1,000 3,000Kilowatt-hours 2,000 4,000Required1. Use activity-based costing to determine a unit cost…
6. Groch Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing. Supervising.... Other $29,200 $5,700 $22,100 Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing) Batches (Supervising) Product H2 Product Q9... 9,800 100 10,200 1,900 Total 20,000 2,000 Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. Product H2 Product Q9 Sales (total).. $97,400 $120,200 Direct materials (total). $32,900 $55,600 Direct labor (total).. $44,600 $41,000 The activity rate for the Supervising activity cost pool under activity-based costing is…
Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $31.58 per unit, while product B has been assigned $8.69 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Activity Costs $ 198,000 Activity Driver Consumption 2,000 21,000 168,000 40,000 40,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: Cost Pools Machine setup Materials handling Electric power Number of units produced Direct materials cost Direct labor cost. Number of setup hours Pounds of materials used Kilowatt-hours Product A Product B A 4,000 $ 31,000 $ 33,000 Cost per Unit 200 1,000 4,000 Cost Drivers Setup hours Pounds of materials Kilowatt-hours Required: 1. Use activity-based costing to determine a unit cost for…
Q-1: The Hum co. has decided to distribute the costs of service departments by the algebraic method. The producing department A and B the service departments X and Y and the monthly data are: Actual factory overhead Cost before distribution Rs Service provided by Y 50% 84,000 58,000 20,000 17,600 A 40% 50 30 20 Y. 10 Required: Total factory overhead of producing department after distribution of service department cost. Department A predetermined overhead rate is based on direct labor hours. The total rate is Rs3, 40% of which fixed. Fixed overhead budgeted is Rs 46,000. The Actual direct labor hours for the month were 34,000. Compute spending and idle capacity variances for department A.
PROBLEM 1 FIGHTING Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor hours (DLHs). The company has two products, H16Z and P25P, about which it has provided the following data: H16Z P25P Direct materials per unit P10.20 P50.50 Direct labor per unit P8.40 P25.20 Direct labor-hours per unit 0.40 1.20 Annual production 30,000 10,000 The company’s estimated total manufacturing overhead for the year is P1,464,480 and the company’s estimated total direct labor-hours for the year is 24,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Estimated Overhead Cost Supporting direct labor (DLHs) P 552,000 Setting…
Exercise 7-15 (Static) Comprehenslve Activity-Based Costing Exercise [LO7-2, LO7-3, LO7-4, LO7-5] Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries Other overhead costs $ 300,000 100,000 $ 400,000 Total overhead costs Total Activity for the Activity Cost Pool Supporting direct labor Order processing Customer support Other Activity Measure Number of direct labor-hours Number of customer orders Number of customers This is an organization- sustaining activity Year 20, 900 DLHS 400 orders 200 customers Not applicable Distribution of Resource Consumption Across Activities Supporting Direct Labor 40% Customer Support Orden Processing Other Total Wages and salaries Other overhead costs 30% 20% 10% 100% 100% 30% 10% 20% 40% During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order…