FUNDAMENTALS OF COST ACCT.-CONNECT CARD
6th Edition
ISBN: 9781260852349
Author: LANEN
Publisher: MCG
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Chapter 9, Problem 32E
Reported Costs and Decisions
Kima Company manufactures and sells two models of a home appliance. The Standard model is a basic appliance with mostly manual features, while the Galaxy model is highly automated. The appliances are produced to order, and there are no inventories at the end of the year.
The cost accounting system at Kima allocates
Required
- a. Compute product line profits for the Standard model and the Galaxy model for year 1.
- b. A study of overhead shows that without the Standard model, overhead would fall to $2,250,000. Assume all other revenues and costs would remain the same for the Galaxy model in year 2. Compute product line profits for the Galaxy model in year 2 assuming the Standard model was not produced or sold.
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Hot'lanta, Inc., which uses the high-low method to analyze cost behavior, has determined that machine
hours best explain the company's utilities cost. The company's relevant range of activity varies from a low
of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first
six months of the year:
Month
Utilities Machine
Hours
January $8700 800
February 8360
720
March
8950
810
April
9360
920
May
9625
950
June
9150
900
1The variable utilities cost per machine hour is:
a) $0.18.
b) an amount other than those listed above.
) $4.50.
d) $5.00.
e) $5.50.
2. The fixed utilities cost per month is:
a) an amount other than those listed above.
b) $4,760.
) $3,764.
d) $5,100.
e) $4,400.
3. Using the high-low method, the utilities cost associated with 980 machine hours would be:
a) an amount other than those listed above.
b) $9,660.
) $9,700.
d) $9,790.
e) $9,510.
Hot'lanta, Inc., which uses the high-low method to analyze cost behavior, has determined that machine
hours best explain the company's utilities cost. The company's relevant range of activity varies from a low
of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first
six months of the year:
Month
Utilities Machine
Hours
January s8700
800
February 8360
720
March
8950
810
April
9360
920
May
9625
950
June
9150
900
1.The variable utilities cost per machine hour is:
a) $0.18.
b) an amount other than those listed above.
C) $4.50.
d) $5.00.
e) $5.50.
2. The fixed utilities cost per month is:
a) an amount other than those listed above.
b) $4,760.
c) $3,764.
d) $5,100.
e) $4,400.
McClellan Recreation manufactures and sells two models of paddle boards: Starter and Pro. The Starter model is a basic board used
for instruction and purchased by novices. The Pro model is made with premium materials and comes with several accessories. The
boards are produced to order, and there are no inventories at the end of the year.
The cost accounting system at McClellan allocates overhead to products based on direct labor cost. Overhead in year 1, which just
ended, was $2,536,800. Data on units sold for year 1 along with the unit sales price and unit direct costs for the two models follow:
Sales price per unit
Direct materials per unit
Direct labor per unit
Required:
a. Compute product line profits or loss for the Starter model and the Pro model for year 1.
b. A study of overhead shows that without the Starter model, overhead would fall to $1,442,000. Assume all other revenues and costs
would remain the same for the Pro model in year 2. Compute product line profits for the Pro…
Chapter 9 Solutions
FUNDAMENTALS OF COST ACCT.-CONNECT CARD
Ch. 9 - Give examples of cost drivers commonly used to...Ch. 9 - What is the death spiral? How is it related to the...Ch. 9 - The product costs reported using either plantwide...Ch. 9 - Why do companies commonly use direct labor-hours...Ch. 9 - What are the costs of moving to an activity-based...Ch. 9 - What are the basic steps in computing costs using...Ch. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - What type of organization is most likely to...Ch. 9 - Prob. 10RQ
Ch. 9 - How does complexity lead to higher costs? Why is...Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - Why are cost drivers based on direct labor widely...Ch. 9 - Prob. 15CADQCh. 9 - Activity-based costing could not be applied in a...Ch. 9 - Activity-based costing is the same as department...Ch. 9 - Prob. 18CADQCh. 9 - It is clear after reading this chapter that...Ch. 9 - Prob. 20CADQCh. 9 - Prob. 21CADQCh. 9 - Prob. 22CADQCh. 9 - Prob. 23CADQCh. 9 - Activity-based costing is just another inventory...Ch. 9 - Prob. 25CADQCh. 9 - Prob. 26CADQCh. 9 - Prob. 27CADQCh. 9 - One of the issues we identified with traditional...Ch. 9 - The cost accounting manager at your business says...Ch. 9 - Prob. 30CADQCh. 9 - Prob. 31ECh. 9 - Reported Costs and Decisions Kima Company...Ch. 9 - Plantwide versus Department Allocation Munoz...Ch. 9 - Plantwide versus Department Allocation Main Street...Ch. 9 - Unitwide versus Department...Ch. 9 - Prob. 36ECh. 9 - Prob. 37ECh. 9 - Upriver currently applies overhead on the basis of...Ch. 9 - Compute the unit costs for the two products, V-1...Ch. 9 - Prob. 40ECh. 9 - Prob. 41ECh. 9 - Activity-Based Costing in a Nonmanufacturing...Ch. 9 - Activity-Based versus Traditional Costing Maglie...Ch. 9 - Activity-Based Costing versus Traditional Costing...Ch. 9 - Activity-Based Costing in a Service Environment...Ch. 9 - Activity-Based versus Traditional Costing Isadores...Ch. 9 - Prob. 47ECh. 9 - Activity-Based Costing: Cost Flows through...Ch. 9 - Prob. 49ECh. 9 - Activity-Based Costing for an Administrative...Ch. 9 - Prob. 51ECh. 9 - Time-Driven Activity-Based Costing Kim...Ch. 9 - Time-Driven ABC for an Administrative Service The...Ch. 9 - Comparative Income Statements and Management...Ch. 9 - Comparative Income Statements and Management...Ch. 9 - Prob. 56PCh. 9 - Activity-Based Costing and Predetermined Overhead...Ch. 9 - Activity-Based Costing and Predetermined Overhead...Ch. 9 - Choosing an Activity-Based Costing System Pickle...Ch. 9 - Churchill Products is considering updating its...Ch. 9 - Utica Manufacturing (UM) was recently acquired by...Ch. 9 - Cain Components manufactures and distributes...Ch. 9 - Prob. 63PCh. 9 - Prob. 64PCh. 9 - Prob. 65PCh. 9 - Cawker Products has two manufacturing...Ch. 9 - MTI makes three types of lawn tractors: M3100,...Ch. 9 - Prob. 68PCh. 9 - Prob. 69PCh. 9 - Prob. 72IC
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