Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 12, Problem 49P
1.
To determine
Write a memo to the president of Company N regarding its performance evaluation.
2.
To determine
Indicate a proper action for management.
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Fisher Fixtures manufactures three types of lighting fixtures, with model names of Silver, Gold, and Platinum. It applies all indirect costs
according to an annual predetermined rate based on direct labor-hours. The plant controller has recommended that the company
switch to an activity-based costing system. The controller's staff prepared the following cost estimates for next year (year 2) for the
recommended cost drivers.
Activity
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Assume that the following cost-driver volumes occurred in January, year 2:
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Farnsworth Company has gathered data on its overhead activities and associated costs for the past 10 months. Tracy Heppler, a member of the controller's department, has convinced management that overhead costs can be better estimated and controlled if the fixed and variable components of each overhead activity are known. One such activity is receiving raw materials (unloading incoming goods, counting goods, and inspecting goods), which she believes is driven by the number of receiving orders. Ten months of data have been gathered for the receiving activity and are as follows:
Month
Receiving Orders
Receiving Cost $
1
1,000
18,000
2
700
15,000
3
1,500
28,000
4
1,200
17,000
5
1,300
25,000
6
1,100
21,000
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1,600
29,000
8
1,400
24,000
9
1,700
27,000
10
900
16,000
Assume that Tracy has used the method of least squares on the receiving data and has gotten the following results:
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Fermi Company decided to look more closely at the materials receiving activity in its factory. The driver for receiving is the number of receiving orders. The following information for a year was collected: Demand for receiving orders: 130,000 Resources needed: a. 6 workers capable of completing 25,000 receiving orders per year. (The completion of a receiving order requires unloading the materials onto the receiving dock, checking the receiving order against the purchase order and invoice, and carrying the materials to the materials storeroom.) Salary is $27,000 for each worker b. Supplies (paper, grease markers, small tools, rags) expected to cost $0.80 per receiving order c. Workbenches, dollies, computers, etc.; depreciation $14,400 per year d. Space for the receiving dock, utilities; $9,800 per year
Required:
1. Prepare a static budget for the receiving activity for the year.
2. Calculate the cost per receiving order based on annual demand for receiving
Chapter 12 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 12 - Why is goal congruence important to an...Ch. 12 - Define and give examples of the following terms:...Ch. 12 - Prob. 3RQCh. 12 - Explain the relationship between performance...Ch. 12 - Prob. 5RQCh. 12 - What is the key feature of activity-based...Ch. 12 - Prob. 7RQCh. 12 - Define and give examples of the following terms:...Ch. 12 - Give an example of a common resource in an...Ch. 12 - Explain how and why cost allocation might be used...
Ch. 12 - Define the term cost allocation base. What would...Ch. 12 - Referring to Exhibit 125, why are marketing costs...Ch. 12 - Prob. 13RQCh. 12 - Why do some managers and accountants choose not to...Ch. 12 - Why is it important in responsibility accounting...Ch. 12 - Prob. 16RQCh. 12 - Prob. 17RQCh. 12 - Prob. 18RQCh. 12 - Prob. 19RQCh. 12 - Prob. 21RQCh. 12 - Prob. 22RQCh. 12 - Prob. 23RQCh. 12 - Define the term manufacturing cycle efficiency.Ch. 12 - Prob. 25RQCh. 12 - What is meant by aggregate productivity, and what...Ch. 12 - For each of the following organizational subunits,...Ch. 12 - Prob. 28ECh. 12 - Prob. 29ECh. 12 - The following data pertain to the Waikiki Sands...Ch. 12 - Lackawanna Community College has three divisions:...Ch. 12 - Countywide Cable Services, Inc. is organized with...Ch. 12 - Prob. 36ECh. 12 - Prob. 37ECh. 12 - Prob. 38ECh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 41PCh. 12 - Rocky Mountain General Hospital serves three...Ch. 12 - Refer to the organization chart for Rocky Mountain...Ch. 12 - Prob. 44PCh. 12 - Buckeye Department Stores, Inc. operates a chain...Ch. 12 - Building Services, Co. (BSC) was started a number...Ch. 12 - Warriner Equipment Company, which is located in...Ch. 12 - Prob. 49PCh. 12 - MedTech, Inc. manufactures diagnostic testing...Ch. 12 - Prob. 51PCh. 12 - Cathys Classic Clothes is a retailer that sells to...Ch. 12 - Pacific Rim Industries is a diversified company...
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