A local picnic table manufacturer has budgeted these overhead costs: Purchasing $66,000 Handling Materials 33,500 Machine Setups 75,200 Inspections 30,000 Utilities 51,000 They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Cost Driver Activity Orders Material Moves 1,340 Machine Setups 16,000 Number of Inspections 6,000 Square Feet 170,000 Recent success has yielded an order for 1,0 tables. Assume direct labor Activity 1,000 112,600 15,200 5,300 70 Order, Units Direct Materials Machine Hours Direct Labor Hours Number of Purchase Orders 600 per hour of $25.

A local picnic table manufacturer has budgeted these overhead costs: Purchasing $66,000 Handling Materials 33,500 Machine Setups 75,200 Inspections 30,000 Utilities 51,000 They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Cost Driver Activity Orders Material Moves 1,340 Machine Setups 16,000 Number of Inspections 6,000 Square Feet 170,000 Recent success has yielded an order for 1,0 tables. Assume direct labor Activity 1,000 112,600 15,200 5,300 70 Order, Units Direct Materials Machine Hours Direct Labor Hours Number of Purchase Orders 600 per hour of $25.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 3PA: A local picnic table manufacturer has budgeted these overhead costs: They are considering adapting...

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A local picnic table manufacturer has budgeted these overhead costs: They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Recent success has yielded an order for 1,000 tables. Assume direct labor costs per hour of $20. Determine how much the job would cost given the following activities:
A local picnic table manufacturer has budgeted these overhead costs: Purchasing $63,000 Handling Materials 31,920 Machine Setups 64,400 Inspections 30,600 Utilities 25,500 They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Cost Driver Activity Orders 700 Material Moves 1,330 Machine Setups 14,000 Number of Inspections 6,000 Square Feet 170,000 Recent success has yielded an order for 1,000 tables. Assume direct labor costs per hour of $25. Activity Order, Units 1,000 Direct Materials 112,800 Machine Hours 15,200 Direct Labor Hours 5,300 Number of Purchase Orders 70 Number of Material Moves 850 Number of Machine Setups 90 Number of Inspections 500 Number of Square Feet Occupied 9,000 Determine how much the job would cost given the following activities: Do not round intermediate computations and round final answers to nearest whole number. Cost Assigned Direct Materials…
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A local picnic table manufacturer has budgeted these overhead costs: Purchasing $80,000 Handling Materials 34,540 Machine Setups 63,000 Inspections 25,000 Utilities 25,500 They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Cost Driver Activity Orders Material Moves B00 1,340 Machine Setups 14,000 Number of Inspections 5,000 Square Feet 190,000 Recent success has yielded an order for 900 tables. Assume direct labor costs per hour of $25. Activity Order, Units Direct Materials Machine Hours Direct Labor Hours Number of Purchase Orders Number of Material Moves Number of Machine Setups Number of Inspections Direct Materials Direct Labor Number of Material Moves 900 Number of Machine Setups Number of Inspections Number of Square Feet Occupied Total Order Cast 112,700 15,300 5,300 Number of Square Feet Occupied Determine how much the job would cast given the following activities: Do not round Intermediate computations and round final answers…
A local picnic table manufacturer has budgeted these overhead costs: Purchasing Handling Materials Machine Setups 63,000 Inspections 25,000 Utilities 25,500 They are considering adapting ABC costing and have estimated the cast drivers for each pool as shown: Cost Driver Activity Orders Material Moves Order, Units Direct Materials Machine Setups Number of Inspections Square Feet 190,000 Recent success has yielded an order for 900 tables. Assume direct labor costs per hour of $25. Activity Machine Hours Direct Labor Hours Number of Purchase Orders Number of Material Moves $80,000 34,540 Direct Materials Direct Labor Number of Material Moves Number of Machine Setups BOD 1,340 14,000 5,000 Number of Inspections Number of Square Feet Occupied Total Order Cast 900 Number of Machine Setups Number of Inspections Number of Square Feet Occupied Determine how much the job would cost given the following activities: Do not round Intermediate computations and round final answers to nearest whole…
A local picnic table manufacturer has budgeted these overhead costs: Purchasing $63,000 Handling Materials 32,160 Machine Setups 70,500 Inspections 24,500 Utilities 28,500 They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Cost Driver Activity Orders 700 Material Moves 1,340 Machine Setups 15,000 Number of Inspections 5,000 Square Feet 190,000 Recent success has yielded an order for 900 tables. Assume direct labor costs per hour of $15. Activity Order, Units 900 Direct Materials 112,700 Machine Hours 15,300 Direct Labor Hours 5,400 Number of Purchase Orders 50 Number of Material Moves 750 Number of Machine Setups 90 Number of Inspections 400 Number of Square Feet Occupied 7,000 Determine how much the job would cost given the following activities: Do not round intermediate computations and round final answers to nearest whole number.
A local picnic table manufacturer has budgeted these overhead costs - ERROR: "Handling materials" is $33,350 - (note their order as you will use the same order down below): Purchasing $70,000 Handling Materials 33,333 Machine Setups 70,500 Inspections 25,500 Utilities 45,000 They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown (again, note their order): Cost Driver Activities Orders 700 Material moves 1,334 Machine Setups 15,000 Number of Inspections 5,000 Square Feet 180,000 Recent success has yielded an order for 1,000 tables. Assume direct labor costs per hour of $20. Determine how much the job would cost given the following activities (once more, note their order for the last worksheet): Activity Order (Units) 1,000 Direct Materials 112,700 Machine Hours 15,200 Director labor hours 5,300 Number of Purchase orders 60 Number of material moves 800 Number of machine setups 100 Number of…
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Churchill Products is considering updating its cost system to an activity-based costing system and is interested in understanding the effects. The company’s cost accountant has identified three overhead cost pools along with appropriate cost drivers for each pool. Cost Pools Costs Activity Drivers Utilities $ 310,000 62,000 machine-hours Scheduling and setup $ 290,000 580 setups Material handling $ 795,000 1,590,000 pounds of material The company manufactures three models of water basins (Oval, Round, and Square). The plans for production for the next year and the budgeted direct costs and activity by product line are as follows. Products Oval Round Square Total direct costs (material and labor) $80,000 $80,000 $70,000 Total machine-hours 30,000 10,000 22,000 Total number of setups 60 300 220 Total pounds of material 490,000 290,000 810,000 Total direct labor-hours 3,500 2,000 4,500 Number of units produced 4,400 2,000 6,000 Required: (Do not…
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Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is: Previously, Sanjay Bhatt, Firenza Companys controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 50,000. Sanjay has been reading about activity-based costing, and he wonders whether or not it might offer some advantages to his company. He decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setups for setup cost, engineering hours for engineering cost, and machine hours for other. Budgeted amounts for these drivers are 5,000 purchase orders, 500 setups, and 2,500 engineering hours. Sanjay has been asked to prepare bids for two jobs with the following information: The typical bid price includes a 40 percent markup over full manufacturing cost. Required: 1. Calculate a plantwide rate for Firenza Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate activity rates for the four overhead activities. What is the bid price of each job using these rates? 3. Which bids are more accurate? Why?
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