Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 4, Problem 1.2GAP
Assigning Costs using Traditional System, ABC System
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of in $171,500 in
The company has identified the following information about its overhead activity cost pools and the two product lines
Calculate the activity rates for each cost pool in Hazelnut's ABC system.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Shalom Company uses three activity pools to apply overhead to its products. Each activity has a
cost driver used to allocate the overhead costs to the product. The activities and related overhead
costs are as follows: product design P40,000; machining P300,000; and material handling
P100,000. The cost drivers and estimated use are as follows:
Activity Cost Pools
Activities
Product design
Number of product changes
Machining
Machine hours
Material handling
Number of set-ups
X
Estimated Use of Cost Driver
Per Activity
Amounts must be in whole numbers. Example: 88,000 or (88,000)
Unit costs be in whole numbers. Example: 88
Format of percentages: 88%
Words must be in capital letters.
10
150,000
100
What is the activity-based overhead rate for material handling?
J
Chrzan, Incorporated, manufactures and sells two products: Product EO and Product NO. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
Product E0
Product Ne
Total direct labor-hours
Activity Cost Pools
Labor-related
Production orders
Order size
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated
Overhead
Cost
Multiple Choice
$33.94 per MH
$54.20 per MH
Direct
Expected Labor-Hours
Production
Per Unit
10.1
410
1,550
9.1
$51.98 per MH
$21.40 per MH
Activity
Measures
DLHS
orders
MHs
Total
Direct
Labor-
Hours
$ 301,890
61,087
585,366
$948,343
The activity rate for the Order Size activity cost pool under activity-based costing is closest to:
4,141
14, 105
18,246
Product E
4,141
850
5,550
Expected Activity
Product NO
14, 105
950
5,250
Total
18,246
1,800
10,800
Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows:
Home
Work
$ 40
17
$ 66
Direct materials cost per unit
Direct labor cost per unit
Sales price per unit
Expected production per nonth
32
363
574
620 units 330 units
Harbour has monthly overhead of $186,075, which is divided into the following cost pools:
$ 91,300
53,975
40,800
Setup costs
Quality control
Maintenance
Total
$186,075
The company has also compiled the following information about the chosen cost drivers:
Work
Total
Home
38
Number of setups
Number of inspections
Number of machine hours 1,600
72
110
330
305
635
1,800 3,400
Required:
1. Suppose Harbour uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead
assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar
amount.)
Overhead Assigned
Home Model:
Work Model:
Total Overhead Cost
2. Calculate…
Chapter 4 Solutions
Managerial Accounting
Ch. 4 - What is the difference between a volume-based cost...Ch. 4 - Explain the statement that traditional costing...Ch. 4 - Prob. 3QCh. 4 - How does activity-based costing differ from...Ch. 4 - What types of business might use activity-based...Ch. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Why must costs be classified into different...Ch. 4 - Prob. 10Q
Ch. 4 - Prob. 11QCh. 4 - Explain the difference between the activity-rate...Ch. 4 - Define activity-based management and explain how...Ch. 4 - Prob. 14QCh. 4 - Prob. 15QCh. 4 - What is non-value-added activity. Considering the...Ch. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 1MCCh. 4 - Both traditional and ABC cost systems focus on...Ch. 4 - Prob. 3MCCh. 4 - Number of setups is an example of a a. Unit-level...Ch. 4 - Prob. 5MCCh. 4 - Prob. 6MCCh. 4 - Prob. 7MCCh. 4 - Prob. 8MCCh. 4 - Prob. 9MCCh. 4 - Prob. 10MCCh. 4 - Prob. 1MECh. 4 - Prob. 2MECh. 4 - Prob. 3MECh. 4 - Identifying terms in ABC and ABM Use the following...Ch. 4 - Prob. 5MECh. 4 - Prob. 6MECh. 4 - Assigning Costs Using Activity Proportions Refer...Ch. 4 - Calculating Activity Rates for ABC System Lakeside...Ch. 4 - Prob. 9MECh. 4 - Prob. 10MECh. 4 - Prob. 11MECh. 4 - Prob. 12MECh. 4 - Classifying Activities According to Level,...Ch. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Assigning Costs Using Activity Rates Refer to the...Ch. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Comparing Traditional Costing Systems and...Ch. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Identifying Value-Added and Non-Value-Added...Ch. 4 - Prob. 17ECh. 4 - Prob. 18ECh. 4 - Calculating Target Cost Majesty Company uses...Ch. 4 - Assigning Costs using Traditional System, ABC...Ch. 4 - Assigning Costs using Traditional System, ABC...Ch. 4 - Prob. 1.3GAPCh. 4 - Prob. 1.4GAPCh. 4 - Prob. 1.5GAPCh. 4 - Prob. 2.1GAPCh. 4 - Prob. 2.2GAPCh. 4 - Prob. 2.3GAPCh. 4 - Prob. 2.4GAPCh. 4 - Prob. 2.5GAPCh. 4 - Prob. 3.1GAPCh. 4 - Prob. 3.2GAPCh. 4 - Prob. 3.3GAPCh. 4 - Prob. 3.4GAPCh. 4 - Prob. 3.5GAPCh. 4 - Prob. 3.6GAPCh. 4 - Prob. 3.7GAPCh. 4 - Prob. 3.8GAPCh. 4 - Prob. 4.1GAPCh. 4 - Describing the Impact of ABM and TQM on a Company...Ch. 4 - Prob. 4.3GAPCh. 4 - Prob. 4.4GAPCh. 4 - Describing the Impact of ABM and TQM on a Company...Ch. 4 - Prob. 4.6GAPCh. 4 - Prob. 4.7GAPCh. 4 - Prob. 4.8GAPCh. 4 - Prob. 5.2GAPCh. 4 - Prob. 1.1GBPCh. 4 - Prob. 1.2GBPCh. 4 - Prob. 1.3GBPCh. 4 - Prob. 1.4GBPCh. 4 - Prob. 1.5GBPCh. 4 - Prob. 2.1GBPCh. 4 - Prob. 2.2GBPCh. 4 - Prob. 2.3GBPCh. 4 - Prob. 2.4GBPCh. 4 - Prob. 2.5GBPCh. 4 - Prob. 3.1GBPCh. 4 - Selecting Cost Drivers, Assigning Costs using...Ch. 4 - Prob. 3.3GBPCh. 4 - Prob. 3.4GBPCh. 4 - Prob. 3.5GBPCh. 4 - Prob. 3.6GBPCh. 4 - Prob. 3.7GBPCh. 4 - Prob. 3.8GBPCh. 4 - Prob. 4.1GBPCh. 4 - Prob. 4.2GBPCh. 4 - Prob. 4.3GBPCh. 4 - Prob. 4.4GBPCh. 4 - Selecting Cost Drivers, Assigning Costs Using...Ch. 4 - Prob. 4.6GBPCh. 4 - Prob. 4.7GBPCh. 4 - Prob. 4.8GBPCh. 4 - Defining Concepts of Target Costing, Just-in-Time,...Ch. 4 - Defining Concepts of Target Costing, Just-in-Time,...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC: What would be the predetermined rate for each cost pool?arrow_forwardPatricio Corp. uses ABC to compute the product cost for external reports. The company has three activity pools and applies manufacturing overhead costs using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools: Estimated OH Cost Expected Activity Activity 1 $180,144 14,400 Activity 2 $175,968 7,200 Acitivity 3 $390,702 13,200 The actual cost and activities for the current year are presented below: Actual OH Cost Actual Activity Activity 1 $179,394 14,490 Activity 2 $175,428 7,110 Acitivity 3 $390,702 13,350 a. What is the activity rate under the ABC system for activity 3 would be? b. What would be the total overhead applied to Work in Process account during the year? c. What would be the total overhead debited to the manufacturing account during the year?arrow_forwardForner, Inc., manufactures and sells two products: Product Z1 and Product Z8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity Estimated Expected Activity Activity Overhead Activity Cost Pools Labor-related Measures Cost Product Z1 Product Z8 Total DLHS $112,190 40,440 609,770 600 2,000 Machine setups Оrder size 2,600 1,200 6, 200 setups 500 700 MHs 3,000 3,200 $762,400 The activity rate for the Machine Setups activity cost pool under activity-based costing is closest to: Multiple Cholce $203.26 per setup $190.55 per setup $122.97 per setup 92 F AQI 61 nere to search DELLarrow_forward
- The current cost accounting system charges overhead to products based on machine-hours. What unit product costs will be reported for the two products if the current cost system continues to be used? (Round intermediate calculations and "Per unit cost" answers to 2 decimal places.) 308 510 Total cost Per unit cost A consulting firm has recommended using an activity-based costing system, with the activities based on the cost pools identified by the cost accountant. What are the cost driver rates for the four cost pools identified by the cost accountant? (Round your answers to 2 decimal places.) Incoming inspection % of material dollars Production per machine-hour Machine setup per setup Shipping per unit What unit product costs will be reported for the two products if the ABC system suggested by the cost accountant’s classification of…arrow_forwardFletes Corporation manufactures two products: Product O95C and Product M31N. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products O95C and M31N. Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $ 207,000 9,000 MHs Machine setups Number of setups $ 140,000 350 setups Product design Number of products $ 98,000 2 products Order size Direct labor-hours $ 340,000 10,000 DLHs Activity Measure Product O95C Product M31N Machine-hours 6,000 3,000 Number of setups 190 160 Number of products 1 1 Direct labor-hours 4,000 6,000 Using the ABC system, how much total manufacturing overhead cost would be assigned to Product O95C?arrow_forwardSuki Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools: Estimated Overhead Cost Activity 1 Activity 2 Activity 3 Actual activity for the current year was as follows: Actual Activity Activity 1 Activity 2 Activity 3 $34,300 $20,520 $36,112 O a. $30,026.50 O b. $36,112.00 OC. $36,107.00 O d. $35,773.45 1,415 1,805 1,585 0 Expected Activity 1,400 1,800 1,600 The amount of overhead applied for Activity 3 during the year was closest to: Øarrow_forward
- Draus Products Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools. Estimated Overhead Cost Expected Activity Activity #1 $60,048 4,800 Activity #2 $58,656 2,400 Activity #3 $130,324 4,400 Actual costs and activities for the current year were as follows. Actual Overhead Cost Actual Activity Activity #1 $59,798 4,830 Activity #2 $58,476 2,370 Activity #3 $130,234 4,450 The total amount of the debits to the manufacturing overhead during the year was closest to: $248,508. $248,988. $250,334. $251,110.arrow_forwardUsing ABC to compute product costs per unit Spectrum Corp. makes two products: C and D. The following data have been summarized: The company plans to manufacture 250 units of each product. Calculate the product cost per unit for Products C and D using activity-based costing.arrow_forwardNorth Street Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 20 5 720 Deluxe 29 17 460 Overhead costs $17,150 $19,800 Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead cost assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.) A) $18,475 B) $11,500 C) $19,750 D)…arrow_forward
- Requ Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows: Activity Cost Pools Machining Designing costs Setup costs Number of machine hours Number of design hours Number of batches Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows: Product A Product B Product C 26,000 2,800 40 Total Cost of Pool Cost Driver $250,600 Number of machine hours 61,600 Number of design hours 66,402 Number of batches Product A Product B Product C Total Overhead Assigned 36,000 1,600 170 Estimated Cost Driver 71,600 7,000 465 9,600 2,600 255 Required: 1. Using activity proportions, determine the amount of overhead assigned to each product. (Do not round your intermediate calculations. Round your final answers to nearest whole number.)arrow_forwardDraus Products Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools. estimated overhead expected activity activity#1 $60,048 4800 activity#2 $58,656 2400 activity#3 $130,324 4400 Actual costs and activities for the current year were as follows. actual overhead cost actual activity acrivity#1 $59,798 4830 activity#2 $58,476 2370 activity#3 $130,234 4450 The total amount of overhead applied during the year was closest to: 1. $248,508 2. $248,988 3. $250,155 4. $251,334arrow_forwardCarlise has identified the following information about its overhead activity pools and the two product lines: Cost Assigned to Pool $ 20,910 $ 85,120 $ 34,790 Activity Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours Quantity or Amount Consumed by Quantity or Amount Consumed by Indoor Line Outdoor Line Complete this question by entering your answers in the tabs below. Indoor Model Outdoor Model Total Required: 1. Suppose Carlise used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. 2. Calculate the activity proportions for each activity pool in Carlise's ABC system. 3. Calculate the amount of overhead that Carlise will assign to the Indoor line if it uses an ABC system. 4. Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC system. 5. Compare the results for a traditional system…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY