Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 7, Problem 8CE
Refer to Cornerstone Exercise 7.7. Assume that Orchard Fresh, Inc., uses the weighted average method of joint cost allocation and has assigned the following weights to the four grades of apples:
Total joint cost is $18,000.
Required:
- 1. Allocate the joint cost to the four grades of apples using the weighted average method. (Carry out the percent calculations to four significant digits. Round all cost allocations to the nearest dollar.)
- 2. What if the factory found that Grade A apples were being valued less by customers and decided to decrease the weight factor for Grade A apples to 3.0? How would that affect the allocation of cost to Grade A apples? How would it affect the allocation of cost to the remaining grades?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $132.00 per unit. The company requires a profit of 0.20 of selling price. How much is the target cost per unit?
Round to two decimal places.
Apply the Concepts, Cost Reporting
Medco Inc., a manufacturing firm, has four activities: purchasing materials, molding, inspecting molds, and grinding imperfect molds. Purchasing
materials and molding are necessary activities; inspection and grinding are unnecessary. SQ provides the value-added quantity for each activity; AQ is
the actual activity output. The following data pertain to the four activities for the year ending (actual price per unit of the activity driver is assumed to
be equal to the standard price):
Activity Activity Driver
Purchasing Purchasing hours
Molding
Inspecting Inspection hours
Molding hours
Grinding. Number of units
Required:
SQ AQ SP
28,000 34,000 $20
42,000 47,600 121
0 8,400 15
0 6,000
6
1. Prepare a cost report for the year 1 ended that shows value-added costs, non-value-added costs, and total costs for each activity by completing
the following table:
Value-and Non-Value-Added Cost Report for the Year 1 Ended
Activity
Value-Added
Costs
Non-Value-Added…
Firm X has a production process that has a total joint cost of $14,000. At the split-off point, there are 1,000 pounds of Product 1 and 3,000 pounds of Product 2. What is the cost per pound of Product 1 using the physical measure method?
Chapter 7 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 7 - Describe the two-stage allocation process for...Ch. 7 - Why must support service costs be assigned to...Ch. 7 - Explain how allocation of support service costs is...Ch. 7 - Prob. 4DQCh. 7 - Explain how allocating support service costs will...Ch. 7 - Prob. 6DQCh. 7 - Explain why it is better to allocate budgeted...Ch. 7 - Why is it desirable to allocate variable costs and...Ch. 7 - Explain why either normal or peak capacity of the...Ch. 7 - Explain why variable bases should not be used to...
Ch. 7 - Prob. 11DQCh. 7 - Explain the difference between the direct method...Ch. 7 - The reciprocal method of allocation is more...Ch. 7 - What is a joint cost? How does it relate to...Ch. 7 - How do joint costs differ from other common costs?Ch. 7 - The expected costs for the Maintenance Department...Ch. 7 - Prob. 2CECh. 7 - Valron Company has two support departments, Human...Ch. 7 - Refer to Cornerstone Exercise 7.3. Now assume that...Ch. 7 - Refer to Cornerstone Exercise 7.3. Now assume that...Ch. 7 - Refer to Cornerstone Exercise 7.3 and solve for...Ch. 7 - Orchard Fresh, Inc., purchases apples from local...Ch. 7 - Refer to Cornerstone Exercise 7.7. Assume that...Ch. 7 - Refer to Cornerstone Exercise 7.7. Assume that...Ch. 7 - A company manufactures three products, L-Ten,...Ch. 7 - Refer to Cornerstone Exercise 7.10. (Round...Ch. 7 - Classify each of the following departments in a...Ch. 7 - Prob. 13ECh. 7 - Identify some possible causal factors for the...Ch. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Kumar, Inc., evaluates managers of producing...Ch. 7 - Refer to the data in Exercise 7.18. When the...Ch. 7 - Jasmine Company manufactures both pesticide and...Ch. 7 - Refer to the data in Exercise 7.20. The company...Ch. 7 - Eilers Company has two producing departments and...Ch. 7 - Refer to the data in Exercise 7.22. The company...Ch. 7 - Refer to the data in Exercise 7.22. The support...Ch. 7 - Alomar Company manufactures four products from a...Ch. 7 - Refer to Exercise 7.25 and allocate the joint...Ch. 7 - Pacheco, Inc., produces two products, overs and...Ch. 7 - Minor Co. has a job order cost system and applies...Ch. 7 - A CPA would recommend changing from plantwide...Ch. 7 - A company uses charging rates to allocate service...Ch. 7 - Chester Company provided information on overhead...Ch. 7 - Which of the following statements is true? a. The...Ch. 7 - Biotechtron, Inc., has two research laboratories...Ch. 7 - AirBorne is a small airline operating out of...Ch. 7 - Duweynie Pottery, Inc., is divided into two...Ch. 7 - Macalister Corporation is developing departmental...Ch. 7 - Prob. 37PCh. 7 - Welcome Inns is a chain of motels serving business...Ch. 7 - Sonimad Sawmill, Inc. (SSI), purchases logs from...Ch. 7 - Prob. 40P
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
- For each of the four situations, calculate the cost basis per device based on the information shown above. (Round intermediate calculations and final answers to 2 decimal places.) A. Only the differential production costs could be considered as the cost basis. B. The total cost per device for normal production of 60,000 devices could be used as the cost basis. C. The total cost per device for productions of 66,000 devices, excluding marketing costs, could be used as the cost basis. D. The total cost per device for production of 66,000 devices, including marketing costs, could be used as the cost basis.arrow_forwardPinter Company had the following environmental activities and product information: 1. Environmental activity costs 2. Driver data 3. Other production data Required: 1. Calculate the activity rates that will be used to assign environmental costs to products. 2. Determine the unit environmental and unit costs of each product using ABC. 3. What if the design costs increased to 360,000 and the cost of toxic waste decreased to 750,000? Assume that Solvent Y uses 6,000 out of 12,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 14,250 of 15,000 pounds of toxic waste. What is the new environmental cost for Solvent Y?arrow_forwardCicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and storing goods. Receiving and assembly are necessary activities; expediting and storing goods are unnecessary. The following data pertain to the four activities for the year ending 20x1 (actual price per unit of the activity driver is assumed to be equal to the standard price): Required: 1. Prepare a cost report for the year ending 20x1 that shows value-added costs, non-value-added costs, and total costs for each activity. 2. Explain why expediting products and storing goods are non-value-added activities. 3. What if receiving cost is a step-fixed cost with each step being 1,500 orders whereas assembly cost is a variable cost? What is the implication for reducing the cost of waste for each activity?arrow_forward
- Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint production process, incurring 250,000 of joint costs. Oakes allocates joint costs based on the physical volume of each product produced. Mononate and Beracyl can each be sold at the split-off point in a semifinished state or, alternatively, processed further. Additional data about the two products are as follows: An assistant in the companys cost accounting department was overheard saying ...that when both joint and separable costs are considered, the firm has no business processing either product beyond the split-off point. The extra revenue is simply not worth the effort. Which of the following strategies should be recommended for Oakes?arrow_forwardA finance manager has to select one of the four different suppliers of raw materials. The total cost functions under the four options are given below. Assume the quality of the raw material to be the same, which of the following is preferred by the finance manager? A) y = 600 + 4.96X B) y = 600 + 5.49X C) y = 600 + 4.41X D) y = 600 + 4.67Xarrow_forwardCassien Inc. manufactures products that pass through two or more processes. During June, equivalent units were computed using the weighted average method: Units completed Units in EWIP X Fraction complete (36,000 X 60%) Equivalent units of output June's costs to account for are as follows: BWIP (10,000 units, 80% complete) Materials Conversion costs Total Required: 91,000 21,600 112,600 $50,000 156,000 95,000 $301,000 1. Calculate the unit cost for June using the weighted average method. Round your answer to the nearest cent.arrow_forward
- GG Products, Ic., prepares tips and stems from a joint process using asparagus. It produced 290,000 units of tips having a sales value at the split-off point of $77,000. It produced 290,000 units of stems having a sales value at split-off of $33,000. Using the net realizable value method, the portion of the total joint product costs allocated to tips was $48,300. Required: Compute the total joint product costs before allocation. (Do not round intermediate calculations.) Total costarrow_forwardThe XYZ Corp. manufactures pots, pans, and bowls from a joint process. May production is 4,000 pots, 7,000 pans, and 8,000 bowls. Respective per unit selling prices at split-off are $15, $10, $5. Joint costs up to the split-off point are $75,000. If joint costs are allocated based upon the sales (market) value at split-off, what amount of joint costs will be allocated to the pots?arrow_forwardA company manufactures two joint products at a joint cost of 1,000. These products can be sold at split-off, or when further processed at an additional cost, sold as higher quality items. The decision to sell at split-off or further process should be based on the: A. allocation of the 1,000 joint cost using the quantitative unit measure B. assumption that the 1,000 joint cost is irrelevant C. allocation of the $1,000 joint cost using the relative sales value approach D. assumption that the 1,000 joint cost must be allocated using a physical-measure approach E. allocation of the 1,000 joint cost using any equitable and rational allocation basisarrow_forward
- Carla Vista Manufacturing manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for the production of 2,900 units. The company's Utilities and Maintenance costs are mixed costs. The fixed portions of these costs are $390 and $290, respectively. Calculate the expected costs to be incurred when production is 4,900 units. Use your knowledge of cost behavior to determine which of the other costs are foxed or variable. Production in Units Production Costs a. Direct Materials b. Direct Labor c. Utilities d. Rent e. Indirect Labor f. Supervisory Salaries & Maintenance 2,900 $ 8,961 23,461 1,666 3,900 6,351 2,400 1,711 Costs Incurred $ 4,900 Type of cost 10 0000 Farrow_forwarde. assign the indirect costs of each activity to products and services. Clear my choice COVID Co. produces two different products (A and X) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $500,000, while the cost of Inspection is $30,000. Product A uses 30% of total machine hours and 70% of total batches. What is the total activity cost assigned to product X? Select one: a. $359,000 O b. $125,000 OC. $22,500 d. $171,000 O e. None of the given ANSWER Next pagearrow_forwardThe KMP Metal Machining Company produces widgets according to customer order. The company has determined that widgets can be produced on three different machine tools: M1, M2, or M3. An analysis of widget production cost reveals the following data: Solve, a. Using a graphical approach, determine the most economical machine tool to use for all order sizes between 1 and 200 units. In other words, determine the subranges within the overall range of 1 to 200 for which each machine tool is preferred. b. Using an algebraic approach, determine the most economical machine tool to use for all order sizes between 1 and 200 units. c. For an order of size 75, which machine tool should be used to produce the order, and what is the total production cost? d. For an order of size 160, assume that the preferred (most economical) machine is unavailable. What penalty (expressed in dollars of additional production cost) must be paid if the second most economical machine is used? The third?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY