FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Activity based costing system means that where overhead is allocated on the basis of different activities and not on single plantwide overhead rate.
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- Required information [The following information applies to the questions displayed below.] Hickory 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 $705,600 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 Machining Machine setups Product design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Machine setups cost Product Y 6,200 50 1 10,000 Product Y % Estimated Overhead Product Z 3,800 70 1 2,000 Product Z Cost $ 192,000 $ 50,400 $ 76,000 $ 387,200 13. Using the ABC system, what percentage of Machine Setups cost is assigned to…arrow_forwardLion Corporation uses an activity-based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation Supervisory expense Equipment depreciation Distribution of Resource Consumption Across Activity Cost Pools: Product C9 $ 47,000 Product UO $ 6,000 Total Supervisory expense 0.60 Activity Cost Pools O $18.00 per MH O $5.30 per MH O $2.82 per MH O $3.18 per MH Mac 0.60 In the second stage, Machining costs are assigned to products using machine- hours (MHS) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: 6,900 Order Filling 3,100 0.10 MHS (Machining) 10,000 b.20 200…arrow_forwardRequired information Skip to question Greenwood Company manufactures two products—15,000 units of Product Y and 7,000 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 $ 227,700 11,000 MHs Machine setups Number of setups $ 153,900 270 setups Production design Number of products $ 91,000 2 products General factory Direct labor-hours $ 257,000 10,000 DLHs Activity Measure Product Y Product Z Machining 8,700 2,300 Number of setups 60 210 Number of products 1 1 Direct labor-hours 8,700 1,300 2. Using the plantwide overhead rate, how much manufacturing overhead cost is…arrow_forward
- Maxey & Sons manufactures two types of storage cabinets-Type A and Type B—and applies manufacturing overhead to all units at the rate of $140 per machine hour. Production information follows. Descriptions Anticipated volume (units) Direct-material cost per unit Direct-labor cost per unit Descriptions 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. Setups Machine hours Outgoing shipments Туре А 160 56,000 200 Туре А 28,000 $38 43 Required 1 Required 2 Required 3 Туре В Unit manufacturing costs 120 78,750 150 The firm's total overhead of $18,865,000 is subdivided as follows: manufacturing setups, $4,116,000; machine processing, $11,319,000 and product shipping, $3,430,000. Required: 1. Compute…arrow_forwardFoam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The company’s activity-based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Cost Pool Activity Measure Activity Rate Supporting direct labor Number of direct labor-hours $ 12 per direct labor-hour Batch processing Number of batches $ 94 per batch Order processing Number of orders $ 278 per order Customer service Number of customers $ 2,633 per customer The company just completed a single order from Interstate Trucking for 2,300 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.7 direct labor-hours. The selling price was $141.10 per unit, the direct materials cost was $108 per unit, and the direct labor cost was $14.00 per unit. This was Interstate Trucking’s only order during the year. Required: Prepare a report showing the customer margin…arrow_forwardKlumper Corporation Is a diversified manufacturer of Industrial goods. The company's activity-based costing system contalns the following stx activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Activity Rates $8 per direct labor-hour $ 3 per machine-hour $ 35 per setup $ 160 per order $ 120 per shipment $ 875 per product Shipments Product sustaining Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year 2,000 50 200 Direct labor-hours 1,825 3,480 13 Machine-hours 40 Machine setups Production orders Shipments Product sustaining 2 13 2 26 2 Requlred: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system? Activity Cost Pool K425 M67 Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost 이 $arrow_forward
- Required information Skip to question Greenwood Company manufactures two products-15, 000 units of Product Y and 7,000 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 $ 213,400 11,000 MHs Machine setups Number of setups $ 61,600 140 setups Production design Number of products $ 78,000 2 products General factory Direct labor-hours $244,000 10,000 DLHS Activity Measure Product Y Product Z Machining 7,400 3,600 Number of setups 60 80 Number of products 1 1 Direct labor-hours 7,400 2,600 2. Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product Y and Product Z?…arrow_forwardAssume a company manufactures only two products—14,000 units of Product C and 6,000 units of Product D. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products C and D: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 300,000 15,000 MH Machine setups Number of setups $ 150,000 200 Setups Product design Number of products $ 78,000 2 Products Activity Measure Product C Product D Machine-hours 9,000 6,000 Number of setups 50 150 Number of products 1 1 Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product D? Multiple Choice $271,500 $261,500 $301,500 $251,500arrow_forwardPlease do not give image formatarrow_forward
- Assume a company manufactures only two products-14,000 units of Product G and 6,000 units of Product H. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products G and H: Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Activity Measure Machine-hours Number of setups Number of products Product G Product H 9,000 50 1 6,000 150 1 Estimated Overhead Cost Expected Activity 15,000 MH 200 Setups $ 300,000 $ 150,000 $ 78,000 2 Products Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product H?arrow_forwardRequired information Greenwood Company manufactures two products-15,000 units of Product Y and 7,000 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 Machining Machine setups Production design General factory Activity Measure Machining Number of setups Number of products Direct labor-hours Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Estimated Overhead Cost $ 227,700 $ 153,908 Product Y Product Z 8,700 60 1 8,700 2,300 210 1 1,300 Expected Activity 11,000 MHS 270 setups $ 91,000. $ 257,000 2 products 10,000 DLHS 14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? (Round your answers to 2…arrow_forwardSultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Cost Pool Labor-related Purchase orders Parts management Board etching General factory Activity Measure Direct labor-hours Number of orders Number of part types Number of boards Machine-hours Expected Overhead Cost $ 233,600 $ 9,360 $ 80,000 $59,850 $ 236,500 Expected Activity 29,200 DLHS 234 orders 100 part types 1,710 boards 21,500 MHS Required: 1. Compute the activity rate for each of the activity cost pools. 2. The expected activity for the year was distributed among the company's four products as follows: Expected Activity Activity Cost Pool Labor-related (DLHS) Purchase orders (orders) Parts management (part types) Board etching (boards) General factory (MHs) Product A Product B Product C Product D 4,400 74 25 430 3,300 16,100 29 3,300 50 44 530 5,400 81 13 18 750 8,100 3,600 6,500 Using the…arrow_forward
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