Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 22, Problem 4CMA
Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold through specialty golf shops. The company is in the process of developing its operating budget for the coming year. Selected data regarding the company’s two products are as follows:
Manufacturing
- a. $42.
- b. $46.
- c. $52.
- d. $62.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Blue Devil Inc. has a significant level of manufacturing overhead. After preparing their budget for the next year, management expects the following overhead costs (the cost driver for each overhead cost pool is also shown):
Activity
Total Cost
Cost Driver
Maintenance
$20,000
Machine hours
Materials receiving
80,000
Shipments received
Machine setups
50,000
Number of setups
Inspection
40,000
Number of inspections
The expected activity for the year for various cost drivers is:
Direct Labor Hours
40,000
Machine Hours
20,000
Shipments Received
4,000
Setups
200
Quality Inspections
8,000
The company is considering accepting a significant production contract. Estimates for the contract are as follows:
Direct materials
$100,000
Direct labor (7,500 hours)
$150,000
Number of material shipments received
290
Number of inspections
50
Number of setups
35
Number of machine hour
3,000…
Tioga company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now
preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the
amount of overhead that should be allocated to the individual product lines from the following information.
Lenses
Mirrors
Units produced
Material moves per product line 5
Direct-labor hours per unit
The total budgeted material-handling cost is 50,000
Required:
1. Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs
allocated to one lens would be what amount?
2. Answer the same question as in requirement 1), but for mirrors
3. Under activity-based costing(ABC), the material-handling costs allocated to one lens would be what amount? The
cost driver for the material-handling activity is the number of material moves
4. Answer the same question as in requirement 3, but for mirrors.
25
25
15…
Catalytic Chemical Corporation has a significant level of manufacturing overhead. After preparing their budget for the next year, management expects the following overhead costs (the cost driver for each overhead cost pool is also shown):
Activity
Total Cost
Cost Driver
Maintenance
$20,000
Machine hours
Materials receiving
80,000
Shipments received
Machine setups
50,000
# of setups
Inspection
30,000
# of inspections
The expected activity for the year for various cost drivers is:
Direct Labor Hours
40,000
Machine Hours
20,000
Shipments Received
4,000
Setups
200
Quality Inspections
8,000
The company is considering accepting a significant production contract. Estimates for the contract are as follows:
Direct materials
$100,000
Direct labor (7,500 hours)
$150,000
Number of material shipments received
290
Number of inspections
50
Number of setups
35
Number of machine houre
3,000…
Chapter 22 Solutions
Financial And Managerial Accounting
Ch. 22 - Prob. 1DQCh. 22 - Briefly describe the type of human behavior...Ch. 22 - What behavioral problems are associated with...Ch. 22 - What behavioral problems are associated with...Ch. 22 - Under what circumstances would a static budget be...Ch. 22 - Prob. 6DQCh. 22 - Why should the production requirements set forth...Ch. 22 - Why should the timing of direct materials...Ch. 22 - A. Discuss the purpose of the cash budget. B. If...Ch. 22 - Give an example of how the capital expenditures...
Ch. 22 - At the beginning of the period, the Fabricating...Ch. 22 - Pasadena Candle Inc. projected sales of 800,000...Ch. 22 - Pasadena Candle Inc. budgeted production of...Ch. 22 - Pasadena Candle Inc. budgeted production of...Ch. 22 - Prepare a cost of goods sold budget for Pasadena...Ch. 22 - Prob. 6BECh. 22 - At the beginning of the school year, Craig Kovar...Ch. 22 - Digital Solutions Inc. uses flexible budgets that...Ch. 22 - Static budget versus flexible budget The...Ch. 22 - Flexible budget for Assembly Department Steelcase...Ch. 22 - Production budget Healthy Measures Inc. produces a...Ch. 22 - Sales and production budgets Sonic Inc....Ch. 22 - Professional foes earned budget for a service...Ch. 22 - Professional labor cost budget for a service...Ch. 22 - Direct materials purchases budget Tobins Frozen...Ch. 22 - Direct materials purchases budget Coca-Cola...Ch. 22 - Direct materials purchases budget Anticipated...Ch. 22 - Direct labor cost budget Ace Racket Company...Ch. 22 - Production and direct labor cost budgets Levi...Ch. 22 - Factory overhead cost budget Sweet Tooth Candy...Ch. 22 - Cost of goods sold budget Delaware Chemical...Ch. 22 - Cost of goods sold budget The controller of...Ch. 22 - Schedule of cash collections of accounts...Ch. 22 - Schedule of cash collections of accounts...Ch. 22 - Schedule of cash payments for service company...Ch. 22 - Schedule of cash payments for a service company...Ch. 22 - Capital expenditures budget On January 1, 20Y6,...Ch. 22 - Forecast sales volume and sales budget For 20Y8,...Ch. 22 - Sales, production, direct materials purchases, and...Ch. 22 - Budgeted income statement and supporting budgets...Ch. 22 - Budgeted income statement and supporting budgets...Ch. 22 - Cash budget The controller of Bridgeport...Ch. 22 - Budgeted income statement and balance sheet As a...Ch. 22 - Forecast sales volume and sales budget Sentinel...Ch. 22 - Sales, production, direct materials purchases, and...Ch. 22 - Budgeted income statement and supporting budgets...Ch. 22 - Prob. 4PBCh. 22 - Cash budget The controller of Mercury Shoes Inc....Ch. 22 - Budgeted income statement and balance sheet As a...Ch. 22 - Analyze Johnson Stores staffing budget for...Ch. 22 - Nursing staff budget Mercy Hospital staffs its...Ch. 22 - Parking lot staff budget Adventure Park is a large...Ch. 22 - Housekeeping staff budget Ambassador Suites Inc....Ch. 22 - Ethics in Action The director of marketing for...Ch. 22 - Communication The city of Milton has an annual...Ch. 22 - Prob. 4TIFCh. 22 - Static budget for a service company A hank manager...Ch. 22 - Objectives of the master budget Dominos Pizza LLC...Ch. 22 - When compared to static budgets, flexible budgets:...Ch. 22 - Hannon Retailing Company prices its products by...Ch. 22 - Ming Company has budgeted sales at 6,300 units for...Ch. 22 - Krouse Company produces two products, forged...
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
- Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing cost information for the next year: If Adam uses the step-down (sequential) method, beginning with the Maintenance Department, to allocate support department costs to production departments, the total overhead (rounded to the nearest dollar) for the Machining Department to allocate to its products would be: a. 407,500. b. 422,750. c. 442,053. d. 445,000.arrow_forwardCloud Shoes manufactures recovery sandals and is planning on producing 12.000 units in March and 11,500 in April. Each sandal requires 1.2 yards if material, which costs $3.00 per yard. The companys policy is to have enough material on hand to equal 15% of next months production needs and to maintain a finished goods inventory equal to 20% of the next months production needs. What is the budgeted cost of purchases for March?arrow_forwardBobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?arrow_forward
- Sunrise Poles manufactures hiking poles and is planning on producing 4,000 units in March and 3,700 in April. Each pole requires a half pound of material, which costs $1.20 per pound. The companys policy is to have enough material on hand to equal 10% of the next months production needs and to maintain a finished goods inventory equal to 25% of the next months production needs. What is the budgeted cost of purchases for March?arrow_forwardThe Calhoun Textile Mill is in the process of deciding on a production schedule. It wishes to know how to weave the various fabrics it will produce during the coming quarter. The sales department has continued orders for each of the 15 fabrics produced by Calhoun. These demands are given in the following table. Also given in this table is the variable cost for each fabric. The mill operates continuously during the quarter: 13 weeks, 7 days a week, and 24 hours a day. There are two types of looms: dobbie and regular. Dobbie looms can be used to make all fabrics and are the only looms that can weave certain fabrics, such as plaids. The rate of production for each fabric on each type of loom is also given in the table. Note that if the production rate is zero, the fabric cannot be woven on that type of loom. Also, if a fabric can be woven on each type of loom, then the production rates are equal. Calhoun has 90 regular looms and 15 dobbie looms. For this problem, assume that the time requirement to change over a loom from one fabric to another is negligible. Management would like to know how to allocate the looms to the fabrics and which fabrics to buy on the market so as to minimize the cost of meeting demand.arrow_forwardFirenza 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?arrow_forward
- Nashler Company has the following budgeted variable costs per unit produced: Budgeted fixed overhead costs per month include supervision of 98,000, depreciation of 76,000, and other overhead of 245,000. Required: 1. Prepare a flexible budget for all costs of production for the following levels of production: 160,000 units, 170,000 units, and 175,000 units. 2. What is the per-unit total product cost for each of the production levels from Requirement 1? (Round each unit cost to the nearest cent.) 3. What if Nashler Companys cost of maintenance rose to 0.22 per unit? How would that affect the unit product costs calculated in Requirement 2?arrow_forwardBox Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?arrow_forwardNozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is 250,000 and 50,000 sales orders are estimated to be processed. a. Determine the activity rate of the sales order processing activity. b. Determine the amount of sales order processing cost associated with 30,000 sales orders.arrow_forward
- Foy Company has a welding activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity: Four welding units, with a lease cost of 12,000 per year per unit Six welding employees each paid a salary of 50,000 per year (A total of 9,000 welding hours are supplied by the six workers.) Welding supplies: 300 per job Welding hours: Three hours used per job During the year, the activity operated at 90 percent of capacity and incurred the actual activity and resource costs, shown on page 676. Lease cost: 48,000 Salaries: 315,000 Parts and supplies: 805,000 Required: 1. Prepare a flexible budget formula for the welding activity using welding hours as the driver. 2. Prepare a performance report for the welding activity. 3. What if welders were hired through outsourcing and paid 30 per hour (the welding equipment is provided by Foy)? Repeat Requirement 1 for the outsourcing case.arrow_forwardJohnston Company cleans and applies powder coat paint to metal items on a job-order basis. Johnston has budgeted the following amounts for various overhead categories in the coming year. In the coming year, Johnston expects to powder coat 120,000 units. Each unit takes 1.3 direct labor hours. Johnston has found that supplies and gas (used to run the drying ovensall units pass through the drying ovens after powder coat paint is applied) tend to vary with the number of units produced. All other overhead categories are considered to be fixed. (Round all overhead rates to the nearest cent.) Required: 1. Calculate the number of direct labor hours Johnston must budget for the coming year. Calculate the variable overhead rate. Calculate the total fixed overhead for the coming year. 2. Prepare an overhead budget for Johnston for the coming year. Show the total variable overhead, total fixed overhead, and total overhead. Calculate the fixed overhead rate and the total overhead rate (rounded to the nearest cent). 3. What if Johnston had expected to make 118,000 units next year? Assume that the variable overhead per unit does not change and the total fixed overhead amounts do not change. Calculate the new budgeted direct labor hours and prepare a new overhead budget. Calculate the fixed overhead rate and the total overhead rate (rounded to the nearest cent).arrow_forwardLens Junction sells lenses for $45 each and is estimating sales of 15,000 units in January and 18,000 in February. Each lens consists of 2 pounds of silicon costing $2.50 per pound, 3 oz of solution costing $3 per ounce, and 30 minutes of direct labor at a labor rate of $18 per hour. Desired inventory levels are: Â Prepare a sales budget, production budget. direct materials budget for silicon and solution, and a direct labor budget.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
- Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningEssentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher: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,
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY