Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries. Other overhead costs Total overhead costs Activity Cost Pool Supporting direct labor Order processing Customer support Other $ 300,000 100,000 $ 400,000 Wages and salaries. Other overhead costs Activity Measure Number of direct labor-hours Number of customer orders. Number of customers This is an organization- sustaining activity Distribution of Resource Consumption Across Activities Supporting Direct Labor Order Processing 30% 10% 40% 30% Data Concerning the Shenzhen Enterprises Order Units ordered 10 units. Direct labor-hours 2 DLHS per unit Selling price Direct materials. Direct labor Total Activity for the Year 20,000 DLHS $ 300 per unit. $ 180 per unit. $ 50 per unit 400 orders 200 customers Not applicable Customer Support 20% 20% Other 10% 40% During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order follow: Total 100% 100%

Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries. Other overhead costs Total overhead costs Activity Cost Pool Supporting direct labor Order processing Customer support Other $ 300,000 100,000 $ 400,000 Wages and salaries. Other overhead costs Activity Measure Number of direct labor-hours Number of customer orders. Number of customers This is an organization- sustaining activity Distribution of Resource Consumption Across Activities Supporting Direct Labor Order Processing 30% 10% 40% 30% Data Concerning the Shenzhen Enterprises Order Units ordered 10 units. Direct labor-hours 2 DLHS per unit Selling price Direct materials. Direct labor Total Activity for the Year 20,000 DLHS $ 300 per unit. $ 180 per unit. $ 50 per unit 400 orders 200 customers Not applicable Customer Support 20% 20% Other 10% 40% During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order follow: Total 100% 100%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 12E: Activity cost pools, activity rates, and product costs using activity-based costing Caldwell Home...

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Overhead costs are assigned to each product based on __________________. A. the proportion of that products use of the cost driver B. a predetermined overhead rate for a single cost driver C. price of the product D. machine hours per product
Rex Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity.
Carltons Kitchens three cost pools and overhead estimates are as follows: Compare the overhead allocation using: A. The traditional allocation method B. The activity-based costing method (Hint: the traditional method uses machine hours as the allocation base.)
Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? 2. What was the applied overhead for last year? 3. Was overhead over- or underapplied, and by how much? 4. What was the total cost per unit produced (carry your answer to four significant digits)?
Rocks Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity.
The cost behavior patterns below are lettered A through H. The vertical axes of the graphs represent total dollars of expense, and the horizontal axes represent production in units, machine hours, or direct labor hours. In each case, the zero point is at the intersection of the two axes. Each graph may be used no more than once. Required: Select the graph that matches the lettered cost described here. a. Depreciation of equipmentthe amount of depreciation charged is computed based on the number of machine hours that the equipment was operated. b. Electricity billflat fixed charge, plus a variable cost after a certain number of kilowatt hours are used. c. City water billcomputed as follows: d. Depreciation of equipmentthe amount is computed by the straight-line method. e. Rent on a factory building donated by the citythe agreement calls for a fixed fee payment, unless 200,000 labor hours are worked, in which case no rent need be paid. f. Salaries of repair workersone repair worker is needed for every 1,000 machine hours or less (i.e., 0 to 1,000 hours requires one repair worker, 1,001 to 2,000 hours requires two repair workers, etc.).
Using the data from Exercise 6.18, compute the equivalent units of production for each of the four departments using the FIFO method. The following data are for four independent process-costing departments. Inputs are added continuously.
Refer to the data in Exercise 7.22. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the costs of the support departments using the sequential method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Using the data in P4-2 and Microsoft Excel: 1. Separate the variable and fixed elements. 2. Determine the cost to be charged to the product for the year. 3. Determine the cost to be charged to factory overhead for the year. 4. Determine the plotted data points using Chart Wizard. 5. Determine R2. 6. How do these solutions compare to the solutions in P4-2 and P4-3? 7. What does R2 tell you about this cost model?
A company has traditionally allocated its overhead based on machine hours but collected this information to change to activity based costing: A. How much overhead would be assigned to each unit under the traditional allocation method? B. How much overhead would be assigned to each unit under activity-based costing?
Refer to the data in Exercise 7.20. The company has decided to use the sequential method of allocation instead of the direct method. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the overhead costs to the producing departments using the sequential method. (Take allocation ratios out to four significant digits. Round allocated costs to the nearest dollar.) 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.)
Frenchys has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?