Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 4, Problem 18E
A.
To determine
Compute the activity-cost of generators and air compressors for the two activities.
B.
To determine
Draft product profitability report of Incorporation N for the year ended December 31
C.
To determine
Discuss the inferences from the product profitability report
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Required information
[The following information applies to the questions displayed below.]
Arctica manufactures snowmobiles and ATVs. These products are made in different departments, and each
department has its own manager. Each responsibility performance report includes only those costs that the
department manager can control: direct materials, direct labor, supplies used, and utilities.
Budget
For Year Ended December 31
Direct materials
Direct labor
Department manager salaries
Supplies used
Utilities
Rent
Totals
Responsibility Accounting Performance Report
Manager, ATV Department
For Year Ended December 31
Controllable Costs
Snowmobile
$ 19,990
10,900
4,800
3,850
410
6,200
$ 46,150
Budgeted
$
Prepare a responsibility accounting performance report for the ATV department. (Under budget amounts should be indicated
minus sign.)
19,990 $
10,200 x
3,850 x
6,500 X
Actual
19,920
11,210
Direct materials
Direct labor
Supplies used
Utilities
Totals
$
40,540
$
60
*Red text indicates no response…
Assume you are the department B manager for Marley's Manufacturing. Marley's operates
under a cost-based transfer structure. Assume you receive the majority of your raw materials
from department A, which sells only to department B (they have no outside sales). After
calculating the operating income in dollars and operating income in percentage, analyze the
following financial information to determine costs that may need further investigation.
Marley's Manufacturing
Income Statement
Month Ending August 31, 2018
Dept. A
Dept. B
Sales
$22,000
$52,000
Cost of goods sold
10,780
27,040
Gross profit
$11,220
$24,960
Expenses:
Utility expenses
$880
$3,640
Wages expense
5,280
10,920
Costs allocated from corporate
1,980
14,560
Total expenses
$8,140
$29,120
Operating income/(loss) in dollars
$
$
Operating income/(loss) in percentage
%
Department B had an operating loss.
Department A had an operating loss.
Department B has a higher wage percent of sales.
Department A receives a higher percent…
Chapter 4 Solutions
Managerial Accounting
Ch. 4 - Why would management be concerned about the...Ch. 4 - Why would a manufacturing company with multiple...Ch. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - How does activity-based costing differ from the...Ch. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Under what circumstances might the activity-based...Ch. 4 - Prob. 9DQCh. 4 - Prob. 10DQ
Ch. 4 - Single plantwide factory overhead rate The total...Ch. 4 - Multiple production department factory overhead...Ch. 4 - Activity-based costing: factory overhead costs The...Ch. 4 - Activity-based costing: selling and administrative...Ch. 4 - Activity-based costing for a service business...Ch. 4 - Kennedy Appliance Inc.s Machining Department...Ch. 4 - Bach Instruments Inc. makes three musical...Ch. 4 - Scrumptious Snacks Inc. manufactures three types...Ch. 4 - Isaac Engines Inc. produces three productspistons,...Ch. 4 - Handy Leather, Inc., produces three sizes of...Ch. 4 - Eclipse Motor Company manufactures two types of...Ch. 4 - The management of Nova Industries Inc....Ch. 4 - Comfort Foods Inc. uses activity-based costing to...Ch. 4 - Nozama.com Inc. sells consumer electronics over...Ch. 4 - Hercules Inc. manufactures elliptical exercise...Ch. 4 - Lonsdale Inc. manufactures entry and dining room...Ch. 4 - Activity cost pools, activity rates, and product...Ch. 4 - Handbrain Inc. is considering a change to...Ch. 4 - Prob. 14ECh. 4 - Activity-based costing and product cost distortion...Ch. 4 - Prob. 16ECh. 4 - Evaluating selling and administrative cost...Ch. 4 - Prob. 18ECh. 4 - Prob. 19ECh. 4 - Activity-based costing for a service company...Ch. 4 - Bounce Back Insurance Company carries three major...Ch. 4 - Gwinnett County Chrome Company manufactures three...Ch. 4 - The management of Gwinnett County Chrome Company,...Ch. 4 - Activity-based and department rate product costing...Ch. 4 - Activity-based product costing Mello Manufacturing...Ch. 4 - Allocating selling and administrative expenses...Ch. 4 - Product costing and decision analysis for a...Ch. 4 - Single plantwide factory overhead rate Spotted Cow...Ch. 4 - Multiple production department factory overhead...Ch. 4 - Activity-based department rate product costing and...Ch. 4 - Activity-based product costing Sweet Sugar Company...Ch. 4 - Allocating selling and administrative expenses...Ch. 4 - Product costing and decision analysis for a...Ch. 4 - Life Force Fitness, Inc., assembles and sells...Ch. 4 - Prob. 2MADCh. 4 - Prob. 3MADCh. 4 - Production run size and activity improvement...Ch. 4 - Prob. 5MADCh. 4 - Ethics in Action The controller of Tri Con Global...Ch. 4 - Communication The controller of New Wave Sounds...Ch. 4 - Pelder Products Company manufactures two types of...Ch. 4 - The Chocolate Baker specializes in chocolate baked...Ch. 4 - Young Company is beginning operations and is...Ch. 4 - Cynthia Rogers, the cost accountant for Sanford...
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