FUND.ACCT.PRIN.
25th Edition
ISBN: 9781260247985
Author: Wild
Publisher: RENT MCG
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Textbook Question
Chapter C, Problem 2QS
Computing plantwide
Chan Company identified the following activities, costs, and activity' drivers for this year. The company manufactures two types of go-karts: fast and standard.
ActivityExpected costsExpected Activity
Handling materials............._____ $625,000 100,000 parts
Inspecting product............._____ 900,000 1,500 batches
Processing purchase orders......____. 105,000 700 orders
Paying suppliers..............._____ 175,000 500 invoices
Insuring the factory............._____ 300,000 40,000 square feet
Designing packaging..........._____ 75,000 2 models
1. Compute a single plantwide overhead rate assuming that the company assigns overhead based on 100,000 budgeted direct labor hours.
2. In January of this year, the fast model required 2,500 direct labor hours and the standard model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.
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EXERCISE 1
XYZ Company has identified the following overhead activities, costs, and activity drivers for the
coming year:
Activity
Expected Cost
Activity Driver
Activity Capacity
$45,000
80,000
15,000
30,000
50,000
Number of moves
Material-handling costs..
Machine costs...
450
Machine hours..
Number of orders.
Number of parts..
Number of setups..
20,000
Order costs..
750
Receiving costs..
Setup costs..
50,000
250
Assume that each activity corresponds to a process. XYZ's normal activity is 5,000 direct labor
hours. The following two jobs were completed during March:
Job X-1
Job Y-4
$1,500
$750
Direct materials
$2,000
$750
Direct labor ($15 per hour)...
Units completed...
Number of moves.
Machine hours..
Number of orders.
Number of parts.
Number of setups..
200
200
3
6
125
75
3
12
200
800
1
4
Required:
1. Determine the unit cost for each job using direct labor hours to apply overhead.
2. A company manufacturing two products furnishers the following data for a year:
Product
Annual
Total
Total number
Total number
Output (units)
machine
of purchase
of set ups
hours
orders
A
100
500
50
5
B
75
700
40
10
175
1200
90
15
The annual overheads are as under:
Volume related activity costs
RO 20000
Set up related costs
RO 15000
Purchase related costs
RO 35000
Total
RO 70000
You are required to calculate the cost per unit of each product A and B based on:
a. Traditional method of charging overheads
b. Activity based costing method
本本本本本本**本本本本本 本 本*
Units produced
Production runs per quarter
Direct materials cost per unit
Direct labor cost per unit
Supervision
Setup labor
Incoming inspection
Total overhead
Manufacturing overhead in the plant has three main functions: supervision, setup labor, and Incoming material Inspection.
Data on manufacturing overhead for a representative quarter follow:
$ 288,750
336,000
241,500
$ 866,250
Standard
14,000
a. Using current costing system
b. Using proposed ABC system
50
$30
50
Required:
a. Compute the unit costs for the two products, Standard and Premium, using the current costing system at Benton (using direct labor
costs as the allocation basis for overhead).
b. Compute the unit costs for the two products, Standard and Premium, using the proposed ABC system at Benton.
Note: For all requirements, do not round Intermediate calculations. Round your answers to 2 decimal places.
S
S
Answer is complete but not entirely correct.
Premium
3,500
25
$64
75
Unit cost
Standard
120.00 X S
117.67 X S…
Chapter C Solutions
FUND.ACCT.PRIN.
Ch. C - Prob. 1QSCh. C - Computing plantwide overhead rates P1 Chan Company...Ch. C - Computing overhead rates under ABC P2 Refer to the...Ch. C - Prob. 4QSCh. C - Prob. 5QSCh. C - Prob. 6QSCh. C - Prob. 7QSCh. C - Prob. 8QSCh. C - Prob. 9QSCh. C - Prob. 10QS
Ch. C - Prob. 11QSCh. C - Prob. 1ECh. C - Prob. 2ECh. C - Prob. 3ECh. C - Prob. 4ECh. C - Prob. 5ECh. C - Exercise C-6 Activity-based costing P2 Northwest...Ch. C - Prob. 8ECh. C - Prob. 9ECh. C - Prob. 10ECh. C - Prob. 11ECh. C - Prob. 12ECh. C - Problem C-1A Applying activity-based costing P1 P2...Ch. C - Prob. 2PSACh. C - Prob. 3PSACh. C - Prob. 4PSACh. C - Prob. CSPCh. C - Prob. 1DQCh. C - Complete the following for a traditional two-stage...Ch. C - What is the difference between operating...Ch. C - What is activity-based costing? What is its goal?Ch. C - What is a cost object?
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