Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 20P
a)
To determine
Determine the amount of
b)
To determine
Determine the amount of overhead
c)
To determine
Formulate the overhead allocation policy for both department I and department II and determine the overhead allocation using this policy.
d)
To determine
The necessary reason to disaggregate the overhead cost pool to accomplish the fairness
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Baird Manufacturing Company uses two departments to make its products. Department I is a cutting department that is machine
Intensive and uses very few employees. Machines cut and form parts and then place the finished parts on a conveyor belt that carries
them to Department II, where they are assembled into finished goods. The assembly department is labor Intensive and requires many
workers to assemble parts Into finished goods. The company's manufacturing facility Incurs two significant overhead costs: employee
fringe benefits and utility costs. The annual costs of fringe benefits are $256,000 and utility costs are $184,000. The typical
consumption patterns for the two departments are as follows:
Machine hours used
Direct labor hours used
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15,900
5,100
The supervisor of each department receives a bonus based on how well the department controls costs. The company's current policy
requires using a single allocation base (machine hours or labor hours) to…
3.1 Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion
The management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department factory overhead rate method. The following factory overhead was budgeted for Nova:
Fabrication Department factory overhead
$697,000
Assembly Department factory overhead
287,000
Total
$984,000
Direct labor hours were estimated as follows:
Fabrication Department
4,100
hours
Assembly Department
4,100
Total
8,200
hours
In addition, the direct labor hours (dlh) used to produce a unit of each product in each department were…
Single Plantwide and Multiple Production Department
Factory Overhead Rate Methods and Product Cost Distortion
The management of Nova Industries Inc. manufactures
gasoline and diesel engines through two production
departments, Fabrication and Assembly. Management
needs accurate product cost information in order to guide
product strategy. Presently, the company uses a single
plantwide factory overhead rate for allocating factory
overhead to the two products. However, management is
considering the multiple production department factory
overhead rate method. The following factory overhead was
budgeted for Nova:
Fabrication Department factory overhead
Assembly Department factory overhead
Total
Direct labor hours were estimated as follows:
Fabrication Department
Assembly Department
Total
In addition, the direct labor hours (dlh) used to produce a
unit of each product in each department were determined
from engineering records, as follows:
Production Departments Gasoline Engine Diesel Engine…
Chapter 12 Solutions
Survey Of Accounting
Ch. 12 - 1.What is a cost object? Identify four different...Ch. 12 - Prob. 2QCh. 12 - 3.If the cost object is a manufactured product,...Ch. 12 - Prob. 4QCh. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Prob. 7QCh. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - 10.Why are some manufacturing costs not directly...
Ch. 12 - Prob. 11QCh. 12 - 12.On January 31, the managers of Integra, Inc....Ch. 12 - 13.Respond to the following statement: The...Ch. 12 - Prob. 14QCh. 12 - Define the term cost pool. How are cost pools...Ch. 12 - LO 4-1Exercise 4-1A Direct versus indirect costs...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Exercise 4-4APooling overhead cost Ware...Ch. 12 - Prob. 5ECh. 12 - Exercise 4-5A Allocating overhead cost among...Ch. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Exercise 4-6AAllocating overhead costs among...Ch. 12 - Exercise 4-9AAllocating to solve a timing problem...Ch. 12 - Prob. 11ECh. 12 - Exercise 4-11AHow the allocation of fixed cost...Ch. 12 - Prob. 13ECh. 12 - Problem 4-17A Cost accumulation and allocation...Ch. 12 - Problem 4-18A Selecting an appropriate cost driver...Ch. 12 - Problem 4-19A Cost allocation in a service...Ch. 12 - Prob. 17PCh. 12 - Problem 4-21A Allocation to accomplish smoothing...Ch. 12 - Problem 4-22A Allocating indirect costs between...Ch. 12 - Prob. 20PCh. 12 - Prob. 1ATCCh. 12 - Prob. 2ATCCh. 12 - ATC 4-3 Research Assignment Using real-world data...Ch. 12 - Prob. 4ATCCh. 12 - Prob. 5ATC
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