Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 2.3GAP
To determine
Concept introduction:
Activity Based Costing (ABC):
ABC costing method is generally used to allocate the
To calculate:
The Cost assigned to Indoor line using the ABC system
Expert Solution & Answer
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Check out a sample textbook solutionStudents have asked these similar questions
The overhead absorption rate used to allocate manufacturing overhead is calculated by:
Select one:
a.
dividing the total estimated manufacturing overhead costs by the total estimated quantity of the allocation base
b.
dividing the total actual manufacturing overhead costs by the total estimated quantity of the cost driver
c.
dividing the total estimated manufacturing overhead by the total actual quantity of the cost driver
d.
dividing the total estimated quantity of the cost driver by the total estimated manufacturing overhead costs
Overhead costs are assigned to each product based on ________.
Group of answer choices
A. the proportion of that product’s use of the cost driver
B. a predetermined overhead rate for a single cost driver
C. price of the product
D. machine hours per product
What is the proper order of tasks in an ABC system?
a.identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the products
b.assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools
c.identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products
d.identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools
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,...
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- Frenchys has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?arrow_forwardCustoms has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?arrow_forwardWhat is the proper order of tasks In an ABC system? identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the productsarrow_forward
- Overhead costs are assigned to each product based on __________________. A. the proportion of that products use of the cost driver B. a predetermined overhead rate for a single cost driver C. price of the product D. machine hours per productarrow_forwardWhich is not a task typically associated with ABC systems? A. calculating the overhead application rate for each cost pool B. applying a single cost rate C. identifying a cost driver D. more correctly allocating overhead costsarrow_forwardRex Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity.arrow_forward
- Which is the correct formula for computing the overhead rate? A. estimated use of the cost driver for production/estimated overhead for the activity B. estimated overhead for the product/estimated use of the cost driver for the activity C. estimated use of the cost driver for production/estimated overhead for the activity D. estimated overhead for the activity/estimated use of the cost driver for the activityarrow_forwardCaseys Kitchens three cost pools and overhead estimates are as follows: Compare the overhead allocation using: A. The traditional allocation method B. The activity based costing method (Hint: the traditional method uses machine hours as the allocation base.)arrow_forwardWhich is not a step In activity-based costing? A. identify the activities performed by the organization B. identify the cost driver(s) associated with each activity C. compute a cost rate per production D. assign costs to products by multiplying the cost driver rate by the volume of the cost driver units consumed by the productarrow_forward
- Electan Company produces two types of printers. The company uses ABC, and all activity drivers are duration drivers. Electan Company is considering using DBC and has gathered the following data to help with its decision. A. Activities with duration drivers: B. Activities with consumption ratios and costs: C. Products with cycle time and practical capacity: Required: 1. Using cycle time and practical capacity for each product, calculate the total time for all primary activities. Comment on the relationship to ABC. 2. Calculate the overhead rate that DBC uses to assign costs. Comment on the relationship to a unit-based plantwide overhead rate. 3. Use the overhead rate calculated in Requirement 2 to calculate (a) the overhead cost per unit for each product, and (b) the total overhead assigned to each product. How does this compare to the ABC assignments shown in Part B of the Information set? 4. What if the units actually produced were 10,000 for Printer A and 18,000 for Printer B. Using DBC, calculate the cost of unused capacity.arrow_forwardRoberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Overhead costs: Required: 1. Calculate the four activity rates. 2. Calculate the unit costs using activity rates. Also, calculate the overhead cost per unit. 3. What if consumption ratios instead of activity rates were used to assign costs instead of activity rates? Show the cost assignment for the inspection activity.arrow_forwardChoose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.arrow_forward
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