Zester, Inc. uses activity-based costing to account for its carbon fiber wheels manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2021 and their allocation bases are as follows: Activity Total Budgeted Cost Allocation Base Materials Handling $4,200 Number of parts Machine Setup $2,800 Number of setups Insertion of Parts $53,000 Number of parts Finishing $81,600 Finishing direct labor hours Total $141,600 Zester, Inc. expects a total of 450 wheel sets during the year. The wheel sets are expected to use 4,000 parts, require 12 setups and consume 990 hours of finishing time. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the predetermined overhead allocation rate for each activity. Activity Total estimated overhead cost / Total estimated quantity of the overhead allocation base = Predetermined Overhead Allocation Rate Materials Handling / = Machine Setup / = Insertion of Parts / = Finishing / = 2. Compute the expected indirect manufacturing cost of each wheel set. Materials Handling Predetermined Overhead Allocation rate X Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost Materials Handling X = Machine Setup X = Insertion of Parts X = Finishing X = Total Manufacturing Overhead Costs Number of Wheel Sets Manufacturing overhead cost per wheel set
Zester, Inc. uses activity-based costing to account for its carbon fiber wheels manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2021 and their allocation bases are as follows: Activity Total Budgeted Cost Allocation Base Materials Handling $4,200 Number of parts Machine Setup $2,800 Number of setups Insertion of Parts $53,000 Number of parts Finishing $81,600 Finishing direct labor hours Total $141,600 Zester, Inc. expects a total of 450 wheel sets during the year. The wheel sets are expected to use 4,000 parts, require 12 setups and consume 990 hours of finishing time. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the predetermined overhead allocation rate for each activity. Activity Total estimated overhead cost / Total estimated quantity of the overhead allocation base = Predetermined Overhead Allocation Rate Materials Handling / = Machine Setup / = Insertion of Parts / = Finishing / = 2. Compute the expected indirect manufacturing cost of each wheel set. Materials Handling Predetermined Overhead Allocation rate X Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost Materials Handling X = Machine Setup X = Insertion of Parts X = Finishing X = Total Manufacturing Overhead Costs Number of Wheel Sets Manufacturing overhead cost per wheel set
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 11E: Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in...
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Zester, Inc. uses activity-based costing to account for its carbon fiber wheels manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2021 and their allocation bases are as follows:
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Compute the predetermined overhead allocation rate for each activity.
2. Compute the expected indirectmanufacturing cost of each wheel set.
| Activity | Total Budgeted Cost | Allocation Base |
|---|---|---|
| Materials Handling | $4,200 | Number of parts |
| Machine Setup | $2,800 | Number of setups |
| Insertion of Parts | $53,000 | Number of parts |
| Finishing | $81,600 | Finishing direct labor hours |
| Total | $141,600 |
Zester, Inc. expects a total of 450 wheel sets during the year. The wheel sets are expected to use 4,000 parts, require 12 setups and consume 990 hours of finishing time.
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Compute the predetermined overhead allocation rate for each activity.
| Activity | Total estimated overhead cost | / | Total estimated quantity of the overhead allocation base | = | Predetermined Overhead Allocation Rate |
|---|---|---|---|---|---|
| Materials Handling | / | = | |||
| Machine Setup | / | = | |||
| Insertion of Parts | / | = | |||
| Finishing | / | = |
2. Compute the expected indirect
| Materials Handling | Predetermined Overhead Allocation rate | X | Actual Quantity of the Allocation Base Used | = | Allocated Manufacturing Overhead Cost |
|---|---|---|---|---|---|
| Materials Handling | X | = | |||
| Machine Setup | X | = | |||
| Insertion of Parts | X | = | |||
| Finishing | X | = | |||
| Total Manufacturing Overhead Costs | |||||
| Number of Wheel Sets | |||||
| Manufacturing overhead cost per wheel set |
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