Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 6, Problem 15PB
Trail Outfitters has this information for its manufacturing:
Its income statement under absorption costing is as follows:
Prepare an income statement with variable costing and a
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Students have asked these similar questions
Please explain the statement below (T/F) thoroughly with examples illustrating the answer.
"To compute a product’s profit or product margin, the product’s sales and direct costs are needed in addition to the overhead costs computed in an activity-based costing system."
Which of the following best defines standard costing?
a.
It is the same as actual costing but done in real time.
b.
It is a system that allocates overhead costs on the basis of standard overhead rates times the actual quantities of the allocation base used.
c.
It is a system that traces direct costs to output produced by multiplying the standard prices or rates by the standard quantities of inputs allowed for the actual output produced.
d.
It is a system that traces direct cost to output by multiplying actual prices or rates by actual quantities of inputs and allocates overhead costs on the basis of actual quantities of the allocation base used.
Which of the following statements about overhead allocation based on volume alone is correct?
Select one:
a. It will systematically overcost high-volume products and undercost low-volume products.
b. It must be used for external financial reporting.
c. It will systematically overcost low-volume products and undercost high-volume products.
d. It is a key aspect of the activity-based costing model.
Chapter 6 Solutions
Principles of Accounting Volume 2
Ch. 6 - Active Frame, Inc., manufactures clear and tinted...Ch. 6 - TyeDye Lights makes two products: Party and...Ch. 6 - Which is not a step in analyzing the cost driver...Ch. 6 - Overhead costs are assigned to each product based...Ch. 6 - Which of the following is a reason a company would...Ch. 6 - Which is the correct formula for computing the...Ch. 6 - A company anticipates the cost to heat the...Ch. 6 - A company calculated the predetermined overhead...Ch. 6 - Which is not a step In activity-based costing? A....Ch. 6 - What is the proper order of tasks In an ABC...
Ch. 6 - Which is not a task typically associated with ABC...Ch. 6 - Which statement is correct? A. Activity-based cost...Ch. 6 - Activity-based costing systems: A. use a single...Ch. 6 - Activity-based costing is preferable in a system:...Ch. 6 - Absorption costing is also referred to as: A....Ch. 6 - Under variable costing, a unit of product includes...Ch. 6 - Under absorption costing, a unit of product...Ch. 6 - A downside to absorption casting is: not including...Ch. 6 - When the number of units in ending inventory...Ch. 6 - Product costs under variable costing are...Ch. 6 - What is the predetermined overhead rate, and when...Ch. 6 - When is an activity-based costing system better...Ch. 6 - What is the advantage of labeling activities as...Ch. 6 - What conditions are necessary to designate an...Ch. 6 - For each cost pool, identify an appropriate cost...Ch. 6 - How is the primary focus of activity-based costing...Ch. 6 - What are the primary differences between...Ch. 6 - How are service companies similar or different...Ch. 6 - How are costs allocated in an ABC system?Ch. 6 - In production, what has changed to allow ABC...Ch. 6 - Why is it important to know the true cost for a...Ch. 6 - What is the primary difference between variable...Ch. 6 - Why would managers prefer variable costing over...Ch. 6 - Why is absorption costing the method allowable for...Ch. 6 - Can a company gather information for both variable...Ch. 6 - Steeler Towel Company estimates its overhead to be...Ch. 6 - Crystal Pools estimates overhead will utilize...Ch. 6 - A company estimated 100,000 direct labor hours and...Ch. 6 - Cozy, Inc., manufactures small and large blankets....Ch. 6 - Identify appropriate cost drivers for these cost...Ch. 6 - Match the activity with the most appropriate cost...Ch. 6 - Rex Industries has two products. They manufactured...Ch. 6 - Rex Industries has identified three different...Ch. 6 - Customs makes two types of hats: polyester (poly)...Ch. 6 - Customs has three cost pools and an associated...Ch. 6 - Potterii sells its products to large box stores...Ch. 6 - Assign each of the following expenses to either...Ch. 6 - Tri-bikes manufactures two different levels of...Ch. 6 - Cool Pool has these costs associated with...Ch. 6 - Using this information from Planters. Inc., what...Ch. 6 - Green Bay Cheese Company estimates its overhead to...Ch. 6 - Boarders estimates overhead will utilize 160,000...Ch. 6 - A company estimated 50,000 direct labor hours and...Ch. 6 - Cozy, Inc., manufactures small and large blankets....Ch. 6 - Identify appropriate cost drivers for these cost...Ch. 6 - Match the activity with the most appropriate cost...Ch. 6 - Rocks Industries has two products. They...Ch. 6 - Rocks Industries has identified three different...Ch. 6 - Frenchys makes two types of scarves: polyester...Ch. 6 - Frenchys has three cost pools and an associated...Ch. 6 - Carboni recently added a carbon line in addition...Ch. 6 - Assign each of the following expenses to either...Ch. 6 - Stacks manufactures two different levels of hockey...Ch. 6 - Crafts 4 All has these costs associated with...Ch. 6 - Using this information from Outdoor Grills, what...Ch. 6 - Colonels uses a traditional cost system and...Ch. 6 - Five Card Draw manufactures and sells 24,000 units...Ch. 6 - A local picnic table manufacturer has budgeted...Ch. 6 - Explain how each activity in this list can be...Ch. 6 - Medical Tape makes two products: Generic and...Ch. 6 - Box Springs, Inc., makes two sizes of box springs:...Ch. 6 - Please use the information from this problem for...Ch. 6 - A company has traditionally allocated its overhead...Ch. 6 - Carltons Kitchens makes two types of pasta makers:...Ch. 6 - Carltons Kitchens three cost pools and overhead...Ch. 6 - Lampierre makes brass and gold frames. The company...Ch. 6 - Portable Seats makes two chairs: folding and...Ch. 6 - Grainger Company produces only one product and...Ch. 6 - Summarized data for Walrus Co. for its first year...Ch. 6 - Happy Trails has this information for its...Ch. 6 - Appliance Apps has the following costs associated...Ch. 6 - This information was collected for the first year...Ch. 6 - Bobcat uses a traditional cost system and...Ch. 6 - Five Card Draw manufactures and sells 10,000 units...Ch. 6 - A local picnic table manufacturer has budgeted the...Ch. 6 - Explain how each activity in this list can be...Ch. 6 - Wrappers Tape makes two products: Simple and...Ch. 6 - Box Springs. Inc., makes two sizes of box springs:...Ch. 6 - Please use the information from this problem for...Ch. 6 - A company has traditionally allocated its overhead...Ch. 6 - Caseys Kitchens makes two types of food smokers:...Ch. 6 - Caseys Kitchens three cost pools and overhead...Ch. 6 - Lampierre makes silver and gold candlesticks. The...Ch. 6 - Portable Seats makes two chairs: folding and...Ch. 6 - Submarine Company produces only one product and...Ch. 6 - Summarized data for Backdraft Co. for its first...Ch. 6 - Trail Outfitters has this information for its...Ch. 6 - Wifi Apps has these costs associated with its...Ch. 6 - This information was collected for the first year...Ch. 6 - What conditions are optimal for using traditional...Ch. 6 - College Cases sells cases for electronic devices...Ch. 6 - How would a service industry apply activity-based...Ch. 6 - Cape Cod Adventures makes foam noodles with sales...Ch. 6 - In designing a bonus structure to reward your...
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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
- For which cost concept used in applying (he cost-plus, approach to product pricing are fixed manufacturing costs, fixed selling and administrative expenses, and desired profit allowed for in determining the markup? A. Total cost B. Product cost C. Variable cost D. Standard costarrow_forwardCan a company gather information for both variable and absorption costing systems?arrow_forwardWhat types of costs are customarily included in the cost of manufactured products under (A) the absorption costing concept and (B) the variable costing concept?arrow_forward
- A costing approach in which all manufacturing costs are product costs." This statement best describe. a. Normal Costing O b. Variable Costing C. Absorption Costing d. Actual Costingarrow_forwardD, E , F please,arrow_forwardNet income computed using absorption costing can be reconciled to the net income computed using variable costing by computing the difference between a. the gross profit under absorption costing and contribution margin under variable costing. b. the product costs per unit under the two costing methods. c. inventoried fixed factory overhead costs in the beginning and ending finished goods inventories. d. the selling prices under the two costing methods.arrow_forward
- Please explain the statement below (T/F) thoroughly with examples illustrating the answer. "In activity-based costing, a product margin may exclude costs from some of the company’s activity cost pools."arrow_forwardCompute the product margins for B300 and T500 under the company's traditional costing system. Compute the product margins for B300 and T500 under the activity-based costing system. Prepare a quantitative comparison of the traditional and activity-based cost assignments.arrow_forwardRequired: 1. Assume that the company uses absorption costing. a. Calculate the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing. a. Calculate the unit product cost. b. Prepare a contribution format income statement for May.arrow_forward
- PART A Classify each cost below as being either variable (VC) or fixed (FC) with respect to the number of units produced or sold. Also classify each cost as either a direct material (DM), a direct labour (DL), production overheads (OH) or a selling and administrative (SA) cost. Magnitos Factory produces ice cream. Write your answers in the appropriate columns to show the proper classification of each cost. Cost Cost Classification Behaviour (VC or FC) (DM/DL/OH/SA) 1. Depreciation of delivery van. 2. Cost of milk in making ice-cream. 3. Lubricants for machineries. 4. Wages of operatives in cooling department. 5. Insurance for factory building. 6. Rent of finished goods warehouse. 7. Electricity cost at factory. 8. Salary of receptionist at regional office. 9. Commission paid to salesman. 10. Factory manager's salary.arrow_forwardWhich of the following is considered part of the product costs under absorption costing but not under variable costing? Group of answer choices Direct materials Selling expenses Variable overhead Fixed manufacturing overheadarrow_forwardThe major categories or captions that would appear on an income statement prepared in the variable costing format are as follows: Contribution margin Fixed costs Manufacturing margin Operating income Sales Variable cost of goods sold Variable selling and administrative expenses a. Arrange these captions in the proper order in accordance with the variable costing concept. b. Which of the captions represents: 1. The difference between sales and the total of all the variable costs and expenses. 2. The remaining amount of revenue available for fixed manufacturing costs, fixed expenses, and net income?arrow_forward
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