Casey's Commemoratives makes and sells two types of decorative plates. One plate displays a hand-painted image of Princess Kate; the other plate displays a machine-pressed image of Marilyn Monroe. The Kate plates require 25,000 hours of direct labor to make; the Monroe plates require only 5,000 hours of direct labor. Overhead costs are composed of (1) $105,000 machine-related activity costs, including indirect labor, utilities, and depreciation, and (2) $75,000 labor-related activity costs, including overtime pay, fringe benefits, and payroll taxes. Required Page 248 a. Assuming that Casey's uses direct labor hours as the allocation base, determine the amount of the total $180,000 overhead cost that would be allocated to each type of plate. b. Explain why using direct labor hours may distort the allocation of overhead cost to the two products. c. Explain how activity-based costing could improve the accuracy of the overhead cost allocation.

Casey's Commemoratives makes and sells two types of decorative plates. One plate displays a hand-painted image of Princess Kate; the other plate displays a machine-pressed image of Marilyn Monroe. The Kate plates require 25,000 hours of direct labor to make; the Monroe plates require only 5,000 hours of direct labor. Overhead costs are composed of (1) $105,000 machine-related activity costs, including indirect labor, utilities, and depreciation, and (2) $75,000 labor-related activity costs, including overtime pay, fringe benefits, and payroll taxes. Required Page 248 a. Assuming that Casey's uses direct labor hours as the allocation base, determine the amount of the total $180,000 overhead cost that would be allocated to each type of plate. b. Explain why using direct labor hours may distort the allocation of overhead cost to the two products. c. Explain how activity-based costing could improve the accuracy of the overhead cost allocation.

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 4BE: Activity-based costing: selling and administrative expenses Jungle Junior Company manufactures and...

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Question 4 ABC Manufacturing uses activity-based costing. Each product consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information is as follows: Acitivity Materials handling Machine operations Assembling Packaging Allocation Base Number of parts Number of hours Number of parts Number of completed products $0.09 $5.22 $0.35 $2.00 Cost Allocation Rate What is the cost of materials handling per product? Enter your response with two decimals but without a comma or $ sign.
Activity-based costing: selling and administrative expenses Jungle Junior Company manufactures and sells outdoor play equipment. Jungle Junior uses activity-based costing to determine the cost of the sales order processing and the customer return activity. The sales order processing activity has an activity rate of 20 per sales order, and the customer return activity has an activity rate of 100 per return. Jungle Junior sold 2,500 swing sets, which consisted of 750 orders and 80 returns. Determine (A) the total and (B) the per-unit sales order processing and customer return activity cost for swing sets.
Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units of Simple and 146,100 of Removable, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: Â How much is the overhead allocated to each unit of Simple and Removable?
Stage 2 ABC for Manufacturing: Reassigning Costs to Cost Objects Woodland Corporation has developed the following activity cost information for its manufacturing activities: Activity Activity cost Machine setup $ 70.00 per batch Movement 12.00 per batch move 0.12 per pound Drilling 5.00 per hole Welding 3.00 per inch Shaping 20.00 per hour Assembly 16.00 per hour Inspection 1.50 per unit Filling an order for a batch of 100 fireplace inserts (each insert weighing 50 pounds) required the following: • Three batch moves • Two sets of inspections • Drilling six holes in each unit Completing 90 inches of welds on each unit • Thirty minutes of shaping for each unit • One hour of assembly per unit Determine the activity cost of converting the raw materials into 100 fireplace inserts. $ 34,946
Question 3 Part I Advent Corporation has implemented an Activity Based Costing System. The company wants to useABC on its two main products, V1 and V2, and three main activities as follows:ActivityCost Driver Overhead Amount Total Driver VolumeIssuing Purchase Orders # of Purchase Orders $ 150,000 50,000Reviewing Receiving Reports # of Receiving Reports $ 175,000 20,000Making Phone Calls # of Phone Calls $ 450,000 100,000During the year:Product V1 required 150 purchase orders; 150 receiving reports; and 200 phone calls.Product V2 required100 purchase orders; 400 receiving reports; and 350 phone calls. Required:a. Compute the pre-determined overhead rate for each cost pool. b. Compute the total manufacturing overhead cost for Product V1 and Product V2.
Table 2Activity Cost Pool Total Cost Total ActivityAssembly $ 1,114,920 57,000 machine-hoursProcessing orders $ 47,016 1,800 ordersInspection $ 107,328 1,560 inspection-hours Use Table 2 to answer this question. XYZ Corporation has provided the following data from its activity-based costing system (Table 2). The company makes 430 units of product ABA a year, requiring a total of 1,120 machine-hours, 35 orders, and 40 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $130 per unit. According to the activity-based costing system, the product margin for product ABA is: Select one: a. $4,290.10. b. $3,815.50. c. none of the given answer. d. $4,159.50. e. $3,602.10.
k ces Marvin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent to the cost of the supplies to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. A consultant has analyzed the delivery service using activity- based costing methods and identified four activities. Data on these activities follow. Data on these Activity Processing order Loading truck Delivering merchandise Processing invoice Total overhead Cost Driver Number of orders. Number of items. Number of orders Number of invoices Order value Number of orders. Number of items Number of invoices Cost Driver Volume 52 600 12 Cost $75,000 150,000 90,000 72,000 $387,000 Driver Volume 5,000 orders 100,000 items Two of Marvin's customers are City Diner and Le Chien Chaud. Data for orders and deliveries to these two customers follow. City Diner Le Chien Chaud $75,000 $99, 900 110 1,500 150 5,000 orders 4,000 invoices Required: a. What would the delivery charge for…
Question 1.2 Alejandro Kirk Manufacturing produces two types of entry doors: Deluxe and Standard. The assignment basis for support costs has been direct labour dollars. For 2021, Alejandro Kirk the following data for the two products: Deluxe Standard Sales units 50,000 400,000 Sales price per unit $650.00 $475.00 Direct material and labour costs per unit $180.00 $130.00 Manufacturing support costs per unit $80.00 $120.00 Last year, Alejandro Kirk Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. She obtained the following ABC information: Activity Cost Driver Cost Total Deluxe Standard Setups # of setups $500,000 500 400 100 Machine related # of machine hours…
Chapter 6: A Closer Look on Cost Accounting The company makes 2,350 units of product X a year, requiring a total os 3.300 machine hours, 250 orders and 200 inspection hours per year. The product's direct material cost is P201.50 and its direct labor cost in P211.11 per unit. The product sells for P590 per unit. According to the activity-based costing system, the gross margin for product X is? 423,087.50 b. 350,435.50 c. 416,890 d. None of the choice a. 56. The following information is available for Mary Corp. Activity Pool Setups Quality Inspections Assembly (direct labor hour) What is the activity rate for setups? Activity Base 50,000 120,000 400,000 Budgeted Amount 300,000 600,000 2,000,000 a. P5.09 c. РО.75 d. P58.00 b. Рб.00 The activity rate for quality inspection is: с. Рб.00 d. P5.09 a. P5.29 b. P5.00
cer Fouri Multiple Choice O $25.90 $48.09 Abbe Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 600 units. There are three activity cost pools, with estimated costs and expected activity as follows: Activity Cost Pools Activity 1 $ 17,460 Activity 2 $ 19,987 $ 29,884 Activity 3 The overhead cost per unit of Product B is closest to: (Round your intermediate calculations to 2 decimal places.) $34.73 Chapter Four - Connect Estimated Overhead Cost $11.49 Saved Expected Activity Product B 600 600 120 Product A 600 1,700 400 Humans and Animals Parallels Save & Exit Submit 88
Please give me step by step directions for answer Ch 26 pro 9 Activity Rates and Product Costs using Activity-Based Costing Contemporary Lighting Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Activity BudgetedActivity Cost Activity Base Casting $273,280 Machine hours Assembly 155,820 Direct labor hours Inspecting 19,250 Number of inspections Setup 55,870 Number of setups Materials handling 33,210 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity Base Entry Dining Total Machine hours 5,170 4,590 9,760 Direct labor hours 4,450 6,680 11,130 Number of inspections 1,330 420 1,750 Number of setups 300 70 370 Number of loads…
-/1 Question 12 View Policies Current Attempt in Progress Thomsen Computer Company produces three products: Earth, Wind, and Fire. Earth requires 80 machine setups, Wind requires 60 setups, and Fire requires 180 setups. Thomsen has identified an activity cost pool with allocated overhead of $1500000 for which the cost driver is machine setups. How much overhead is assigned to each product? Fire Wind Earth $843750 $281250 $375000 $234375 $703125 $312500 $500000 $500000 $500000 $281250 $500000 $718750