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 3MAD
A.
To determine
Calculate the activity-cost per unit for assembly labor classification-3
B.
To determine
Discuss about the acceptance or rejection of the product engineer’s proposal
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Make-or-Buy, Traditional and ABC Analysis
Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for $67 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows:
Direct materials
$40.00
Direct labor
18.00
Variable overhead
4.00
Fixed overhead
40.00
Prior to making a decision, the company’s CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following:
3 setups—$1,180 each (The setups would be avoided, and total spending could be reduced by $1,180 per setup.)
One half-time inspector is needed. The company…
Assigning Costs to Activities
McCourt Company produces small engines for lawnmower producers. The accounts payable department at McCourt has 10 clerks who process and pay supplier invoices. The total cost of their salaries is $550,000. The work distribution for the activities that they perform is as follows:
Activity
Percentage of Time on Each Activity
Comparing source documents
10 %
Resolving discrepancies
45 %
Processing payment
45 %
Required:
Assign the cost of labor to each of the three activities in the accounts payable department. Round your answers to the nearest dollar.
Activity
Cost Assignment
Comparing source documents
$
Resolving discrepancies
$
Processing payment
$
Angle Max Industries produces a product which goes through two operations, Assembly and Finishing,
before it is ready to be shipped. Next year's expected costs and activities are shown below.
Direct labor hours
Machine hours
Overhead costs
Multiple Choice
Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours.
How much total overhead will be assigned to a product that requires 2 direct labor hour and 3.30 machine hours in the
Assembly Department, and 4.50 direct labor hours and 0.4 machine hours in the Finishing Department?
O$17.60.
Assembly
180,000 DLH
380,000 MH
$380,000
$20.40.
Finishing
148,000 DLH
91, 200 MH
$562, 400
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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