Heintz Products uses activity-based costing to account for product costs. The plant manager has estimated the following cost driversand rates.Activity CentersMaterials inspectionEquipment maintenanceMachine setupsPacking and shippingDirect materials costs were $552,000 and direct labor costs were $392,000 during November, when the plant finished 7,000 poundsof product, had 20 setups, and ran the machines for 15,000 hours. There were no work-in-process inventories.Beginning BalanceRequired:Use T-accounts to show the flow of materials, labor, and overhead costs from the four overhead activity centers through Work-in-Process Inventory and out to Finished Goods Inventory. Use the accounts Materials Inventory, Wages Payable, Work-in-ProcessInventory, Finished Goods Inventory, and four overhead applied accounts.Ending BalanceBeginning BalanceEnding BalanceCost DriversDirect materials costMachine-hoursNumber of production runsPounds of finished outputDebitDebitMaterials InventoryCreditWork in processOverhead Applied: Materials InspectionRate per Cost Driver Unit15% of materials cost$ 30 per machine-hour$ 6,480 per setup$5.30 per poundCreditBeginning BalanceEnding BalanceBeginning BalanceEnding BalanceDebitWages PayableDebitCheck my worCreditWork in processOverhead Applied: Equipment MaintenanceCredit

Activity-based product costing seeks to offer a more accurate and comprehensive view of cost…

Heintz Products uses activity-based costing to account for product costs. The plant manager has estimated the following cost drivers and rates. Activity Centers Materials inspection Equipment maintenance. Machine setups Packing and shipping. Cost Drivers Direct materials cost Machine-hours Number of production runs Pounds of finished output Rate per Cost Driver Unit 15% of materials cost. $30 per machine-hour $ 6,480 per setup $5.30 per pound Direct materials costs were $552,000 and direct labor costs were $392,000 during November, when the plant finished 7,000 pounds of product, had 20 setups, and ran the machines for 15,000 hours. There were no work-in-process inventories.

Heintz Products uses activity-based costing to account for product costs. The plant manager has estimated the following cost drivers and rates. Activity Centers Materials inspection Equipment maintenance. Machine setups Packing and shipping. Cost Drivers Direct materials cost Machine-hours Number of production runs Pounds of finished output Rate per Cost Driver Unit 15% of materials cost. $30 per machine-hour $ 6,480 per setup $5.30 per pound Direct materials costs were $552,000 and direct labor costs were $392,000 during November, when the plant finished 7,000 pounds of product, had 20 setups, and ran the machines for 15,000 hours. There were no work-in-process inventories.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Greenwood Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 192,000 10,000 MHs Machine setups Number of setups $ 50,400 120 setups Production design Number of products $ 76,000 2 products General factory Direct labor-hours $ 387,200 16,000 DLHs Activity Measure Product Y Product Z Machining 7,200 2,800 Number of setups 50 70 Number of products 1 1 Direct labor-hours 7,200 8,800 What is the activity rate for the Product Design activity cost pool? What is the activity rate for the General Factory…
Campbell Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Cost Cost driver Unit Level $75,400 Req A and B 2,900 labor hours Production of 870 sets of cutting shears, one of the company's 20 products, took 160 labor hours and 7 setups and consumed 19 percent of the product-sustaining activities. Complete this question by entering your answers in the tabs below. Req C Allocated overhead Direct cost Total cost per unit Desired profit Sales price Required 8. Had the company used labor hours as a companywide allocation base, how much overhead would It have allocated to the cutting shears? b. How much overhead is allocated to the cutting shears using activity-based costing? c. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using…
Weldon Corporation has provided the following data from its activity-based costing accounting system: Indirect factory wages Factory equipment depreciation Distribution of Resource Consumption across Activity Cost Pools: $ 340,000 $ 240,000 Customer Orders 25% 40% Product Processing 65% 40% Activity Cost Pools Indirect factory wages Factory equipment depreciation The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products. How much indirect factory wages and factory equipment depreciation cost would NOT be assigned to products using the activity-based costing system? Other 10% 20% Total 100% 100%
Finest vent Industial Inc. consists of two production departments (Assembly and Machining) and two service departments (Maintenance and Store). The estimated overhead costs and other relevant information for the respective departments are as follows: Assembly Machining Maintenance Store Estimated overhead costs $95,000 $82,000 $46,000 $30,000 Direct labour hours Machine hours 10,000 2,000 5,000 30,000 It has been estimated that each service department does work for other cost centres in the following proportions: Total labour hours used by departments Assembly Machining Maintenance Store Maintenance to Store to 50% 60% 50% 30% 10% Required: (Show all workings clearly and round all solutions to 2 decimal places) (a) Calculate the total overhead costs for the Machining and Assembly departments after the re-apportionment of the costs from the service departments. (b) Calculate the department overhead rates for the Machining and Assembly departments using the appropriate bases.
Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $200,000 4,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $717,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,700 hours 4,200 hours Account billing lines 950,000 lines 750,000 lines Account verification accounts 8,500 accounts 6,500 accounts Correspondence letters 1,400 letters 1,800 letters How much of the account billing cost will be assigned to Department A? How much of the account verification accounts cost will be assigned to Department B?
Drilling Company uses activity-based costing and provides this information: Driver Rate Manufacturing Activity Materials handling Machinery Assembly Inspection Cost Driver Drilling has just completed 74 units of a component for a customer. Each unit required 94 parts and 2.70 machine hours. The prime cost is $1,240 per finished unit. All other manufacturing costs are classified as manufacturing overhead. Required 1 Number of parts Number of machine hours Number of parts Number of finished units Required: 1. Compute the total manufacturing costs and the unit costs of the 74 units just completed using ABC costing. 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $174 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $294 per unit. Compute the full product cost per unit, including upstream, manufacturing, and…
Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor. Carlise has to overhead of $132,720. Carlise has identified the following information about its overhead activity cost pools and the two product lines: Quantity/Amount Consumed by Indoor Line Quantity/Amount Consumed by Outdoor Line Activity Cost Pools Cost Driver Materials handling Number of moves Quality control Number of inspections Machine maintenance Number of machine hours Required: 1. Suppose Carlise used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) Indoor Model Outdoor Model Total Cost Assigned to Pool $21, 120 $71,760 4,600 inspections $39,840 29,000 machine hours 19,000 machine hours 600 moves 500 moves 5,800 inspections Overhead Assigned
Veruska Corporation has provided the following data from its activity-based costing accounting system: Activity Cost Pools Total Cost Total Activity Designing products P1,394,000 8,200 product design hours Setting up batches 16,000 800 batch set-ups Assembling products 180,000 6,000 assembly hours Data concerning company’s products:…
Maxey & Sons manufactures two types of storage cabinets—Type A and Type B—and applies manufacturing overhead to all units at the rate of $120 per machine hour. Production information follows. Type A Type BAnticipated volume (units) 24,000 45,000 Direct-material cost per unit $ 28 $ 42 Direct-labor cost per unit 33 33 The controller, who is studying the use of activity-based costing, has determined that the firm’s overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities’ three respective cost drivers, follow. Type A Type B TotalSetups 140 100 240 Machine hours 48,000 67,500 115,500 Outgoing shipments 200 150 350 The firm’s total…
Spacely, Corp. makes sprockets in two models: regular and professional, and wants to refine its costing system by allocating overhead using departmental rates. The estimated $843,100 of manufacturing overhead has been divided into two cost pools: Assembly Department and Packaging Department.The following data has been compiled: Spacely, Corp. Assembly Department Packaging Department Total Overhead costs $550,000 $293,100 $843,100 Machine Hours: Regular Model 153,000 35,100 188,100 Professional Model 352,400 12,600 365,000 Direct Labor Hours: Regular Model 40,300 80,600 120,900 Professional Model 322,700 413,400 736,100 (Round your answers to two decimal places when needed and use rounded answers for all future calculations).
Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments HumanResources GeneralFactory Fabricating Assembly Direct costs $185,000 $310,000 $114,200 $91,000 Normal activity: Number of employees — 50 80 150 Square footage 1,100 — 5,400 13,700 Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Valron Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations.…
I am having trouble figuring out how to set this up. Rand Company computed the following activity rates using activity-based costing. Activity Activity Rate Setup $ 1,000 per setup Materials handling $ 50 per materials requisition Inspection $ 2 per unit inspected The company’s deluxe model used the following activities to produce 1,000 units. Activity Actual Activity Usage Setup 3 setups Materials handling 25 materials requisitions Inspection 1,000 units inspected Compute the overhead cost per unit for the deluxe model using activity-based costing.