Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 4, Problem 18P
Adria Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the company’s five activity cost pools:
Required:
1. Compute the activity rate for each of the activity cost pools.
2. The expected activity for the year was distributed among the company’s four products as follows:
Using the ABC data, determine the total amount of
3. Assume that prior to implementing ABC. Adria used a conventional cost system that applied all manufacturing overhead to products based on machine-hours. Explain how the conventional cost assignments would differ from the activity-based cost assignments with respect to Product C.
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Sultan Company uses an activity - based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost
pools: [[Activity Cost Pool, Activity Measure, [[Expected], [Overhead Cost]], Expected Activity], [Labor-related, Direct labor - hours, 270, 900, 30, 100 DLHS], [Purchase
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Suki 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:
Ø
a) Compute the predetermined overhead rate under the current method of allocation and determine the unit
product cost of each product for the current year
b) The company's overhead costs can be attributed to four major activities. These activities and the amount of
overhead cost attributable to each for the current year are given below. Using the data below and an activity-based
costing approach, determine the unit product cost of each product for the current year.
Expected Activity
Activity Cost
Estimated
Product B
Product H
Total
Pools
Overhead
Costs
Machine
setups
required
Purchase
orders issued
$180,000
600
1,200
1,800
38,382
500
100
600
Machine-
92,650
6,800
10,200
17,000
hours
required
Maintenance
138.968
693
907
1,600
requests
ued
$450,000
Chapter 4 Solutions
Introduction To Managerial Accounting
Ch. 4 - What are the three common approaches for assigning...Ch. 4 - Why does activity-based costing appeal to some...Ch. 4 - Why do departmental overheadrates something result...Ch. 4 - What are the four hierarchical levels of activity...Ch. 4 - Why activity-based costing is described as a...Ch. 4 - Why do overhead costs often shift from high-volume...Ch. 4 - What are the three major ways in which...Ch. 4 - What are the major limitations of activity-based...Ch. 4 - Prob. 1AECh. 4 - Prob. 2AE
Ch. 4 - Change the data in red so that the Data area looks...Ch. 4 - Prob. 1F15Ch. 4 - Prob. 2F15Ch. 4 - Prob. 3F15Ch. 4 - Greenvood Company manufactures two products14,000...Ch. 4 - Prob. 5F15Ch. 4 - Prob. 6F15Ch. 4 - Greenvood Company manufactures two products14,000...Ch. 4 - Prob. 8F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - Prob. 10F15Ch. 4 - Prob. 11F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - Prob. 13F15Ch. 4 - Prob. 14F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - ABC Cost Hierarchy L041 The following activities...Ch. 4 - Compute Activity Rates L042 Rustafson Corporation...Ch. 4 - Compute ABC Product Costs L043 Lamer Corporation...Ch. 4 - Contrast ABC and Conventional Product Costs L044...Ch. 4 - Assigning Overhead to Products in ABC L042, L043...Ch. 4 - Cost Hierarchy and Activity Measures L041 Various...Ch. 4 - Contrast ABC and Conventional Product Costs L042,...Ch. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Rocky Mountain Corporation makes two types of...Ch. 4 - Contrasting Activity-Based Costing and...Ch. 4 - Contrasting ABC and Conventional Product cost...Ch. 4 - ABC Cost Hierarchy L041 Mitchell Corporation...Ch. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Contrasting ABC and Conventional Product Costs...Ch. 4 - Contrast Activity-Based Costing and Conventional...Ch. 4 - Adria Company recently implemented an...
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