Excel Applications for Accounting Principles
4th Edition
ISBN: 9781111581565
Author: Gaylord N. Smith
Publisher: Cengage Learning
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Chapter 20, Problem 1R
Bumblebee Mobiles manufactures a line of cell phones. The management has identified the following
The following were incurred in manufacturing two of their cell phones, Bubble and Burst, during the first quarter.
REQUIREMENT
Review the worksheet called ABC that follows these requirements. You have been asked to determine the cost of each product using an activity-based cost system. Note that the problem information is already entered into the Data Section of the ABC worksheet.
Expert Solution & Answer
To determine
Ascertain the cost of each product of Company B in the worksheet by using the activity based cost system.
Explanation of Solution
(Figure 1)
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maintenance costs and machine hours:
Month Maintenance Costs Machine Hours
$ 3,210
4,650
5,175
3,350
3,100
1
2
3
4
5
6
7
8
9
10
11
12
2,950
2,900
2,900
4,120
4,350
3,500
3,775
2,750
3,900
4,050
2,690
2,500
2,580
2,300
2,500
3,160
3,325
2,780
3,000
Required:
1. What is the cost equation for maintenance costs using the high-low method? (Round "slope (unit variable cost)"
to 2 decimal places. Negative amounts should be indicated by a minus sign.)
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
Recommended Cost Driver
Estimated Cost
Estimated Cost Driver Activity
Purchasing material
Number of purchase orders
$ 115,200
240
purchase orders
Receiving material
Direct materials cost
217,600
$ 2,720,000
Setting up equipment
Number of production runs
211,560
120
runs
Machine depreciation and maintenance
Machine-hours
72,590
14,518
hours
Ensuring regulatory compliance
Number of inspections
423,900
54
inspections
Shipping
Number of units shipped
1,040,400
578,000
units
Total estimated cost
$ 2,081,250
In addition, management…
Chapter 20 Solutions
Excel Applications for Accounting Principles
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