The management of Garn Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated activity for the coming year. The Corporation's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated activity for the upcoming year is 59,400 machine-hours. Capacity is 78,400 machine-hours. All of the manufacturing overhead is fixed and is $3,136,000 per year within the range of 59,400 to 78,400 machine-hours. If the Corporation bases its predetermined overhead rate on capacity but the actual level of activity for the year turns out to be 59,900 machine-hours, the cost of unused capacity shown on the income statement prepared for internal management purposes would be closest to: Multiple Choice $26,177 $766,177 $740,000 $26,397

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The manager of the main laboratory facility at UrbanFit Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed I that some costs remain the same each month regardless of the number of lab tests performed. The lab manager collected the following data for the first seven months of the year. (Click the icon to view the data.) Use the high-low method to determine the laboratory's cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 3,500 lab tests are performed next month. Let's begin by determining the formula that is used to calculate the variable cost (slope). Data table Variable cost (slope) Number of Lab Month Tests Performed Total Laboratory Overhead Costs January 2,800 $21,500 February 2,600 $22,700 March 3,100 $27,900 April.... 3,550 $31,400 May 3,700 $28,500 June.. 1,200 $19,500 July 1,400 $14,500 Print Done X

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. 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 Type A 140 48,000 200 Required 1 Required 2 Required 3 Type A 24,000 $ 28 33 The firm's total overhead of $13,860,000 is subdivided as follows: manufacturing setups, $3,024,000; machine processing, $8,316,000; and product shipping, $2,520,000. Required: 1. Compute the unit manufacturing cost of Type A and Type…

The cost accountant for M. Company wants to determine the cost of factory overhead. Based on observation and discussions with plant workers, you feel that five accounts are most relevant. Two are fixed- supervisory salaries and depreciation- and the remaining three are variable. Indirect labor is primarily used to move materials and varies with a number of moves. The largest component of utilities is electricity to run production machinery; which is driven by machine hours. Purchasing seems to be driven by the number of purchase orders. The accounts and their balances for the past six months are shown below:     Indirect         Plant and   Labor       Supervisory              Equipment   Cost Utilities           Purchasing      Salaries                Depreciation July     $14,250           $12,000           $38,200            $20,000            $6,500 Aug 15,800             10,600 35,400             23,000…

an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,600 + $0.21 per machine-hour $38,300 + $1.50 per machine-hour $0.40 per machine-hour $94,800 + $1.50 per machine-hour $68,200 $ 23,440 $ 68,100 $ 9,400 $ 131,700 $ 69,900 During March, the company worked 22,000 machine-hours and produced 16,000 units. The company had originally planned to work 24,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a report showing the spending variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e.,…

Nichols Inc. manufactures remote controls. Currently the company uses a plant- wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers: Activities Material handling Assembly Inspection Cost driver Number of parts Labour hours Time at inspection station The current traditional cost method allocates overhead based on direct manufacturing abour hours using a rate of £200 per labour hour. a. b. Allocation Rate £2 per part £20 per hour £3 per minute What are the indirect manufacturing costs per remote control assuming an activity- based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labour hours, and 2.5 minutes of inspection time. £4.00 per remote control £6.55 per remote control £24.00 per remote control £327.50 per remote control C. d.