
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Manufacturing
Value-Added
Cycle Efficiency
(МСE)
Processing Time
Total Cycle Time
%3D
Manufacturing Cycle Efficiency
Problem 16
Description
Hours
VA
NVA
Receiving and transferring ingredients to storage
Storing ingredients
270
270
Transferring the ingredients from storage
4.5
4.5
Mixing and cooking the ingredients
4.5
4.5
Bottling the water
Transferring the bottles to await custome
shipment
Total
300
7.5
292.5
Cycle Time
300
MCE
0.025
Problem 29
60 x 360 days
= 21,600
B
3,620,400/ 21,600
= 168
Week4_Seatwork Problem1
I Using Chapter 4-Problem 29
(Regis Place)
I Requirement B
I Requirement C
I Due Oct 5, 11:59 PM

Transcribed Image Text:follows:
11:30 b •
Reviewing supplilier er customer centracts (Contracts)
$270,000
Reviewing regulatory compliance issues (Regulation)
375,000
Court actions (Court)
862,500
Management has determined that the appropriate cost allocation base for Con-
tracts is the number of pages in the contract reviewed, for Regulation is the number of
reviews, and for Court is number of hours of court time. For 2010, the legal department
reviewed 450,000 pages of contracts, responded to 750 regulatory review requests, and
logged 3,750 hours in court.
a. Determine the allocation rate for each activity in the legal department.
b. What amount would be charged to a producing department that had 21,000 pages
of contracts reviewed, made 27 regulatory review requests, and consumed 315 pro-
fessional hours in court services during the year?
c. How can the developed rates be used for evaluating output relative to cost incurred
in the legal department? What alternative does the firm have to maintaining an
internal legal department and how might this choice affect costs?
29. LO.4 (OH allocation using cost drivers) Regis Place is a health-care facility that
has been allocating its overhead costs to patients based on number of patient days.
The facility's overhead co sts total $3,620,400 per year and the facility (which operates
monthly at capacity) has a total of 60 beds available. (Assume a 360-day year.) The
facility's accountant is considering a new overhead allocation method using the follow-
ing information:
Cost
Cost Driver
Quantity
Rooms (depreciation, cleaning, etc.)
$ 504,000
# of rooms (25 double)
35
Laundry
151,200
# of beds
60
Nursing care
1,314,000
# of nurse-hours annually
43,800
Physical therapy
960.000
# of hours of rehab
8,000
General services
691,200
# of patient days
Rooms are cleaned daily; laundry for rooms is done, on average, every other day.
a. How many patient days are available at Regis Place?
b. What is the overhead rate per patient day? (Round to the nearest dollar.)
c. Using the individual cost drivers, what is the ove rhead rate for each type of cost?
(Round to the nearest dollar.)
d. Assume a patient stayed at Regis Place for six days. The patient was in a single
room and required 30 hours of physical therapy. What overhead cost would be
assigned to this patient under the current method of overhead allocation? What
overhead cost would be assigned to this patient under the ABC method of over-
bead allocation?
e. Assume a patient stayed at Regis Place for six days. The patient was in a double
room and did not require any physical therapy. What overhead cost would be
assigned to this patient under the current method of overhead allocation? What
overhead cost would be assigned to this patient under the ABC method of over-
head allocation?
End
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