Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Textbook Question
Chapter 4, Problem 4.2BE
Finney Inc. has conducted an analysis of
| Traditional Costing | ABC | |
| Sales revenue | $600,000 | $600,000 |
| Overhead costs: | ||
| Product RX3 | $ 34,000 | $ 50,000 |
| Product Y12 | 36,000 | 20,000 |
| $ 70,000 | $ 70,000 |
Explain how a difference in the overhead costs between the two systems may have occurred.
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Students have asked these similar questions
Finney Inc. has conducted an analysis of overhead costs related to one of its product lines using a traditional costing system (volume-based) and an activity-based costing system. Here are its results.
Traditional Costing ABC
Sales revenue $600,000 $600,000
Overhead Costs:
Product RX3 $34,000 $50,000
ProductY12 36,000 20,000
$70,000 $70,000Explain how a difference in the overhead costs between the two systems may have occurred.
Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an
activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor
costs.
Products
Product 540X
Product 137Y
Product 2495
(a)
Sales Revenue
Product 137Y
$208,000
Product 540X $
Product 2495
$
155,000
$
92,000
Total Costs
Traditional
$54,000
48,000
For each product line, compute operating income using the traditional costing system.
23,000
ABC
$49,000
30,000
46,000
F
Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an
activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor
costs.
Total Costs
Products
Sales Revenue
Traditional
АВС
Product 540X
$ 202,000
$ 59,000
$ 45,900
Product 137Y
172,000
52,000
41,000
Product 2495
84,000
17,000
41,100
X Your answer is incorrect.
For each product line, compute operating income using the traditional costing system.
Product 540X S
143760
Product 137Y
109610
Product 2495
71900
eTextbook and Media
Solution
X Your answer is incorrect.
For each product line, compute operating income using the activity-based costing system.
Product 540X
24
152680
Product 137Y
119410
Product 2495
24
59180
%24
%24
Chapter 4 Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. 4 - Under what conditions is direct labor a valid...Ch. 4 - What has happened in recent industrial history to...Ch. 4 - In an automated manufacturing environment, what...Ch. 4 - What is generally true about overhead allocation...Ch. 4 - What are the principal differences between...Ch. 4 - What is the formula for computing activity-based...Ch. 4 - What steps are involved in developing an activity-...Ch. 4 - Prob. 8QCh. 4 - What is an activity cost pool?Ch. 4 - Prob. 10Q
Ch. 4 - Prob. 11QCh. 4 - What is the formula for assigning activity cost...Ch. 4 - What are the benefits of activity-based costing?Ch. 4 - What are the limitations of activity-based...Ch. 4 - Under what conditions is ABC generally the...Ch. 4 - Prob. 16QCh. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 4.1BECh. 4 - Finney Inc. has conducted an analysis of overhead...Ch. 4 - Splash Co. identifies the following activities...Ch. 4 - Mason Company manufactures four products in a...Ch. 4 - Morgana Company identifies three activities in its...Ch. 4 - Weisman, Inc. uses activity-based costing as the...Ch. 4 - Spud, Inc. a manufacturer of gourmet potato chips,...Ch. 4 - Prob. 4.8BECh. 4 - Pine and Danner is an architectural firm that is...Ch. 4 - Prob. 4.10BECh. 4 - Fixlt, Inc. operates 20 injection molding machines...Ch. 4 - Prob. 4.12BECh. 4 - Indicate whether the following statements are true...Ch. 4 - Compute activity-based overhead rates and assign...Ch. 4 - Adamson Company manufactures four lines of garden...Ch. 4 - Ready Ride is a trucking company. It provides...Ch. 4 - Saddle Inc. has two types of handbags: standard...Ch. 4 - Ayala Inc. has conducted the following analysis...Ch. 4 - EcoFabrics has budgeted overhead costs of 945,000....Ch. 4 - Altex Inc. manufactures two products: car wheels...Ch. 4 - Perdon Corporation manufactures safeslarge mobile...Ch. 4 - Santana Corporation manufactures snowmobiles in...Ch. 4 - Rojas Vineyards in Oakville, California, produces...Ch. 4 - Wilmington, Inc. manufactures five models of...Ch. 4 - Air United, Inc. manufactures two products:...Ch. 4 - Kragan Clothing Company manufactures its own...Ch. 4 - Health 'R Us, Inc., uses a traditional product...Ch. 4 - Santana Corporation manufactures snowmobiles in...Ch. 4 - William Mendel Sons, Inc. is a small...Ch. 4 - Venus Creations sells window treatments (shades,...Ch. 4 - Snap Prints Company is a small printing and...Ch. 4 - Lasso and Markowitz is a law firm that is...Ch. 4 - Manzeck Company operates a snow-removal service....Ch. 4 - Combat Fire, Inc. manufactures steel cylinders and...Ch. 4 - Prob. 4.2APCh. 4 - Shaker Stairs Co. designs and builds factory-made...Ch. 4 - Prob. 4.4APCh. 4 - Lewis and Stark is a public accounting firm that...Ch. 4 - CURRENT DESIGNS As you teamed in the previous...Ch. 4 - Prob. 4.1BYPCh. 4 - Prob. 4.2BYPCh. 4 - Curtis Rich, the cost accountant for Hi-Power...Ch. 4 - As discussed in the chapter, the principles...
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