
Understanding Business
12th Edition
ISBN: 9781259929434
Author: William Nickels
Publisher: McGraw-Hill Education
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What is activity productivity analysis, and what are its limitations?
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- When describing potential loss, what are the metrics that are used?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 Expected Overhead Cost $ 158,800 Number of orders $ 11,605 Number of part types $ 90,470 Number of boards Machine-hours $ 99,000 $ 139,300 Expected Activity 39,700 DLHS 211 orders 109 part types 1,980 boards 19,900 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 Product A Product B Product C Product D Labor-related (DLHS) Purchase orders (orders) 6,700 43 23,100 36 4,200 39 5,700 93 Parts management (part types) 24 19 50 16 Board etching (boards) 590 740 650 0 General factory (MHS) 3,700 8,200 2,900 5,100 Using…arrow_forwardIn the course of developing a system, is it required to offer explanations or summaries of the most critical phases?arrow_forward
- How does Six Sigma fit into operations strategy?arrow_forwardOla Ltd, which uses a job costing system, had two jobs in process at the start of the year: Job L1 ($68,000) andJob L2 ($30,000). The following information is available:i) The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead andmachine activity for the year were anticipated to be $1,000,000 and 25,000 hours, respectively.ii) The company worked on three jobs during the first quarter (i.e. from 1 January to 31 March). Directmaterials used, direct labour incurred and machine hours consumed were as shown in the following table: Job numbers Direct material Direct labour Machine hoursL1 $15,000 $30,000 900L2 - 33,000 1,600L3 45,000 65,000 2,000HI5017 Managerial AccountingPage 2 of 22iii) Manufacturing overhead incurred during the first quarter was $215,000.iv) Ola Ltd completed Job L1 and Job L2 during the first quarter. Job L2 was sold on credit, producing a profitof $30,000 for the company.Required:a) Calculate the company’s predetermined overhead…arrow_forwardExplain what capacity management is and why it is strategically important.arrow_forward
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