Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Chapter 15, Problem 15.26BE
1.
To determine
To compute: The traditional plantwide manufacturing
2.
To determine
To compute: The cost of the job using activity-based costing.
3.
To determine
To identify: Which cost would be better for a manager to use while doing cost estimates.
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Northern Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow:
(Click icon to view data)
Requirement
Calculate the total variable costs of producing 2, 4, and 8 units.
Begin by calculating the cumulative total time in labor-hours using the cumulative average-time learning model. (Round the cumulative average time per unit to the nearest whole number.)
Cumulative number of Cumulative average time
Cumulative total time:
per unit: Labor-hours
Labor-hours
3700
units
2
4
8
3700
←
Data table
Direct material cost
Direct manufacturing labor time for first unit
Learning curve for manufacturing labor time per radar system
Direct manufacturing labor cost
Variable manufacturing overhead cost
Using the formula for an 85% learning curve, b =
In 0.85
In 2
Print
=
$
$
$
-0.162519
0.693147
81,000 per unit of RS-32
3,700 direct manufacturing labor-hours
85% cumulative average timeª
Done
28 per direct…
In Class Assignment 1
AlSaleh has assigned overhead on a plantwide basis to its two products (Tables and Chairs) using
direct labor hours which are estimated to be 200,000 for the current year. The company has decided
to experiment with activity-based costing and has created two activity cost pools and related
activity cost drivers. These two cost pools are Ordering and receiving (cost driver is Purchase
orders) and machine setup (cost driver is number of setups). Overhead allocated to the ordering
and receiving cost pool is $200,000, and $800,000 is allocated to the machine setup cost pool.
Additional information related to these pools is as follows:
Cost Drivers
Tables
Chairs
Purchase orders
30,000
10,000
number of setups
10,000
30,000
a. Determine the amount of overhead assigned to the table product line and the chairs product
line using activity-based costing.
b. What amount of overhead would be assigned to the tables and chairs product lines using
the traditional approach,…
Activity-Based Costing
Slack Corporation has the following predicted indirect costs and cost drivers for the year for the given activity cost pools:
Maintenance
Materials handling
Machine setups
Inspections
Machine hours
Material moves
Machine setups
Inspection hours
Fabrication Department Finishing Department Cost Driver
Machine hours
Material moves
Direct materials cost
Direct labor cost
Machine hours (Fabrication)
Machine hours (Finishing)
Materials moves
Machine setups
Inspection hours
$150,000
The following activity predictions were also made for the year:
Fabrication Department Finishing Department
Direct materials
Direct labor
$50,000
30,000
70,000
It is assumed that the cost per unit of activity for a given activity does not vary between departments. Slack's president, Charles Slack, is trying to
evaluate the company's product mix strategy regarding two of its five product models, ZX300 and SL500. The company has been using a company-
wide overhead rate based on machine hours…
Chapter 15 Solutions
Managerial Accounting (5th Edition)
Ch. 15 - (Learning Objective 1) Which of the following is...Ch. 15 - (Learning Objective 1) Which of the following...Ch. 15 - Prob. 3QCCh. 15 - Prob. 4QCCh. 15 - (Learning Objective 2) What is the current status...Ch. 15 - (Learning Objective 2) Which of the following...Ch. 15 - Prob. 7QCCh. 15 - Prob. 8QCCh. 15 - Prob. 9QCCh. 15 - Prob. 10QC
Ch. 15 - Prob. 15.1SECh. 15 - Identify aspects within each G4 category on a GRI...Ch. 15 - Identify aspects within each G4 Social subcategory...Ch. 15 - Prob. 15.4SECh. 15 - Prob. 15.5SECh. 15 - Prob. 15.6SECh. 15 - Define key sustainability terms (Learning...Ch. 15 - Prob. 15.8SECh. 15 - Prob. 15.9AECh. 15 - Prob. 15.10AECh. 15 - Prob. 15.11AECh. 15 - Prob. 15.12AECh. 15 - Prob. 15.13AECh. 15 - Sustainability and cost behavior (Learning...Ch. 15 - Prob. 15.15AECh. 15 - Prob. 15.16AECh. 15 - Sustainability and budgeting (Learning Objective...Ch. 15 - Prob. 15.18AECh. 15 - Prob. 15.19AECh. 15 - Sustainability and capital investments (Learning...Ch. 15 - Sustainability and the statement of cash flows...Ch. 15 - Prob. 15.22AECh. 15 - Prob. 15.23BECh. 15 - Prob. 15.24BECh. 15 - Prob. 15.25BECh. 15 - Prob. 15.26BECh. 15 - Sustainability and process costing (Learning...Ch. 15 - Prob. 15.28BECh. 15 - Sustainability and CVP concepts (Learning...Ch. 15 - Prob. 15.30BECh. 15 - Prob. 15.31BECh. 15 - Prob. 15.32BECh. 15 - Prob. 15.33BECh. 15 - Sustainability and capital investments (Learning...Ch. 15 - Prob. 15.35BECh. 15 - Prob. 15.36BECh. 15 - Prob. 15.37APCh. 15 - Prob. 15.38APCh. 15 - Prob. 15.39BPCh. 15 - Prob. 15.40BPCh. 15 - Each year for the past six years, Caesars...Ch. 15 - Discussion Questions 1. Pressure to become more...Ch. 15 - Corporate Sustainability Reports Note: In the...Ch. 15 - Sustainability and investment choices...Ch. 15 - Ethics of internal sustainability reporting...Ch. 15 - FirstEnergy and its sustainability report...
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