Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 4, Problem 4.3GBP
To determine
Concept introduction:
Predetermined overhead allocation:
To calculate:
The Gross Margin per unit for each product line using the traditional costing
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Finch Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow
Production costs
Direct materials
Direct labor
Allocated overhead
Total units produced and sold
Total sales revenue
a. Cost per unit
b. Profit
Basco Boards Shimano Boards
Basco Boards
$24.60
$ 30.60
$ 15.30
4,600
$ 400,200
Finch allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount
to $57,000 per quarter, to the two products equally.
Required
a. Compute the per-unit cost for each product.
Note: Do not round intermediate
b. Compute the profit for each product.
$ 37.20
$ 52.20
$ 19.20
8,600
$1,083,600
calculations. Round your answers to 2 decimal places.
Shimano
Boards
Using ABC to compute product costs per unit
Spectrum Corp. makes two products: C and D. The following data have been summarized:
The company plans to manufacture 250 units of each product. Calculate the product cost per unit for Products C and D using activity-based costing.
Chrzan, Incorporated, manufactures and sells two products: Product EO and Product NO. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
Product E0
Product Ne
Total direct labor-hours
Activity Cost Pools
Labor-related
Production orders
Order size
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated
Overhead
Cost
Multiple Choice
$33.94 per MH
$54.20 per MH
Direct
Expected Labor-Hours
Production
Per Unit
10.1
410
1,550
9.1
$51.98 per MH
$21.40 per MH
Activity
Measures
DLHS
orders
MHs
Total
Direct
Labor-
Hours
$ 301,890
61,087
585,366
$948,343
The activity rate for the Order Size activity cost pool under activity-based costing is closest to:
4,141
14, 105
18,246
Product E
4,141
850
5,550
Expected Activity
Product NO
14, 105
950
5,250
Total
18,246
1,800
10,800
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,...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- V&S Mechanical sells and services plumbing, heating, and air conditioning systems. V&S's cost accounting system tracks two cost categories: direct labor and direct materials V&S uses a time-and-materials pricing system, with direct labor marked up 100% and direct materials marked up 50% to recover indirect costs of support staff, support materials, and shared equipment and tools and to earn a profit (Click the icon to view the cost information) Read the requirements Requirement 1. If Dryden presents Lowry with the replace or repair options, what price would he quote for each? Complete the table below to determine the price Dryden would quote for each option Labor Materials Total Price Repair option Replace option Requirements 1. if Dryden presents Lowry with the replace or repair options, what price would he quote for each? 2. If the two options were equally effective for the 3 years that Lowry intends to live in the home, which option would she choose? 3. if Dryden's objective is to…arrow_forwardRooney Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow: Production costs Direct materials Direct labor Allocated overhead Total units produced and sold Total sales revenue Basco Boards Shimano Boards $ 25.30 $ 31.30 $15.65 5,300 $ 479,650 $ 38.60 $53.60 $20.60 9,300 $ 1,236,900 Rooney allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $60,500 per quarter, to the two products equally. Required a. Compute the per-unit cost for each product. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. b. Compute the profit for each product.arrow_forwardDriver Corp. is considering the use of activity-based costing. The following information is provided for the production of two product lines: (Click the icon to view the information.) Driver plans to produce 250 units of Product A and 200 units of Product B. Compute the ABC indirect manufacturing cost per unit for each product. (Round your answers to the nearest cent.) -C Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.) Predetermined OH allocation rate = Data table Activity Setup Machine maintenance Total indirect manufacturing costs Direct labor hours Number of setups Number of machine hours Print $ Cost Allocation Base 106,000 Number of setups 60,000 Number of machine hours $ 166,000 Product A 5,000 30 960 Done Product B 7,000 170 3,040 Total 12,000 200 4,000 - Xarrow_forward
- Annika Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 4,000 units and of Product B is 1,000 units. There are three activity cost pools, with total cost and activity as follows: Total Activity Activity Cost Pool Total Cost Product A Product B Total Activity 1 $ 18,000 700 300 1,000 Activity 2 $ 24,000 500 100 600 Activity 3 $ 60,000 800 400 1,200 The activity-based costing cost per unit of Product A is ?arrow_forwardAbbe Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 2,100 units and of Product B is 1,200 units. There are three activity cost pools, with estimated costs and expected activity as follows: Estimated Expected Activity Overhead Activity Cost Pools Activity 1 Activity 2 Activity 3 Cost Product A Product B Total $60,791 $83,421 1,600 2,600 1,500 1,300 3,100 3,900 $97,442 840 820 1,660 The overhead cost per unit of Product B is closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice $63.47 $87.80 $33 99arrow_forwardMission Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the information provided below. (CMA adapted) Multiple Choice Units produced Material moves per product line Direct labor-hours per product line Budgeted material handling costs: $279,500 Under an activity-based costing (ABC) system, the materials handling costs allocated to one unit of Specialty Windows would be: $6,450.00. $2,170.68. $12,900.00. Wall Mirrors 220 5 1,100 $10,320.00. Specialty Windows 20 60 1,200arrow_forward
- A manufacturer uses activity-based costing to assign overhead costs to products. Budgeted cost information for selected activities for next year follows. Activity Purchasing Cleaning factory Providing utilities Activity cost pool Purchasing Factory Expected Cost $127,600 31,500 63,070 Expected Costs Compute activity rates for each of the cost pools. (Round your answers to 2 decimal places.) Expected Amount of Cost Driver Cost Driver Purchase orders Square feet Square feet 4,400 4,900 Activity Overhead Rate Expected Usage of Cost Driver 4,488 purchase orders 4,900 square feet 4,900 square feet per purchase order per square footarrow_forwardDurban Metal Products makes specialty metal parts and uses activity-based costing for internal decision-making purposes. The company has four activity cost pools as follows: Activity Cost Pool Order size Customer orders Product testing Selling Activity Measure Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls The company's owner wants to know the cost of a customer order requiring 200 direct labor-hours, 11 hours of product testing, and 5 sales calls. Required: What is the total overhead cost assigned to this order? Activity Cost Pool Order size Customer orders Product testing Selling Total overhead cost Activity Rate $ 17.90 per direct labor-hour $ 351.00 per customer order $ 77.00 per testing hour $ 1,496.00 per sales call ABC Costarrow_forwardMoistner, Inc., manufactures and sells two products: Product E6 and Product W9. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours Product E6 700 7.0 4,900 Product W9 100 5.0 500 Total direct labor-hours 5,400 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product E6 Product W9 Total Labor-related DLHs $ 233,604 4,900 500 5,400 Machine setups setups 30,942 500 400 900 Order size MHs 712,045 4,200 4,300 8,500 $ 976,591 If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of…arrow_forward
- Using variable costing, service company Professional Pool Cleaning Service provides pool cleaning services to residential customers. The company has three employees, each assigned to specific customers. The company considers each employees territory as a business segment. The company incurs variable costs that include the employees’ Wages, pool chemicals, and gas for the service vans. Fixed costs include depreciation on the service vans. Following is the income statement for the month of July: Requirements Calculate the contribution margin ratio for each business segment. The business segments had the following numbers of customers: Birman, 60; Meech, 70; and Frond, 40. Compute the service revenue per customer, variable cost per customer, and contribution margin per customer for each business segment. Which business segment was most profitable? List some possible reasons why this segment was most profitable. How might the various reasons affect the company in the long term?arrow_forwardUsing variable costing, service company Divine Pool Cleaning Service provides pool cleaning services to residential customers. The company has three employees, each assigned to specific customers The company considers each employee’s territory as a business segment The company incurs variable costs that include the employees’ wages, pool chemicals, and gas for the service vans. Fixed costs include depreciation on the service vans. Following is the income statement for the month of August: Requirements Calculate the contribution margin ratio for each business Segment. The business segments had the following number of customers Byson, 80; Moore, 50; and Freeman, 110. Compute the service revenue per customer variable cost per customer, and contribution margin per customer for each business segment. Which business segment was most profitable? List some possible reasons why this segment was most profitable. How might the various reasons affect the company in the long term?arrow_forwardRequ Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows: Activity Cost Pools Machining Designing costs Setup costs Number of machine hours Number of design hours Number of batches Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows: Product A Product B Product C 26,000 2,800 40 Total Cost of Pool Cost Driver $250,600 Number of machine hours 61,600 Number of design hours 66,402 Number of batches Product A Product B Product C Total Overhead Assigned 36,000 1,600 170 Estimated Cost Driver 71,600 7,000 465 9,600 2,600 255 Required: 1. Using activity proportions, determine the amount of overhead assigned to each product. (Do not round your intermediate calculations. Round your final answers to nearest whole number.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY