Managerial Accounting
7th Edition
ISBN: 9781260247886
Author: Wild
Publisher: MCG
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Textbook Question
Chapter 4, Problem 9QS
Plant wide rate method P1
A manufacturer uses machine hours to assign
| Budgeted |
$544,000 |
| Budgeted machine hours ……………………………………………………………………… | 6,400 |
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Ch 26 pro 7
Product Costs using Activity Rates
Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is $540,000 and 60,000 sales orders are estimated to be processed.
a. Determine the activity rate of the sales order processing activity.$ ________________________per sales order
b. Determine the amount of sales order processing cost that Nozama.com would receive if it had 45,000 sales orders_________________________________.
Question12
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Current Attempt in Progress
Randel Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Information is
below:
presented
Cost Drivers by Product
Activity Cost Pool
Cost Driver
Estimated Overhead
Budget
Deluxe
Ordering and Receiving Orders
$130,000
600
400
Machine Setup
Setups
297,000
500
400
Machining
Machine hours
1,000,000
150,000
100,000
Assembly
1,200,000
Parts
800,000
1,600,000
Inspection
550
Inspections
300,000
450
Compute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. (Round overhead cost
per unit to 2 decimal places, eg. 12.25 and cost assigned to 0 decimal places, eg. 2,500.)
Overhead cost per unit
per unit
Budget $
per unit
Deluxe $
eTextbook and Media
9:25 PM
)
10/13/20
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.
Chapter 4 Solutions
Managerial Accounting
Ch. 4 - Prob. 1MCQCh. 4 - Prob. 2MCQCh. 4 - All of the following are examples of batch-level...Ch. 4 - Prob. 4MCQCh. 4 - Prob. 5MCQCh. 4 - Why are overhead costs allocated to products and...Ch. 4 - What are three common methods of assigning...Ch. 4 - Why are direct labor hours and machine hours...Ch. 4 - What are the advantages of using a single plant...Ch. 4 - The usefulness of a single plant wide overhead...
Ch. 4 - What is a cost object?Ch. 4 - Explain why a single plantwide overhead rate can...Ch. 4 - Why are multiple departmental overhead rates more...Ch. 4 - Prob. 9DQCh. 4 - Prob. 10DQCh. 4 - Prob. 11DQCh. 4 - Prob. 12DQCh. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - 15. What are the four activity levels associated...Ch. 4 - Prob. 16DQCh. 4 - Prob. 17DQCh. 4 - Prob. 18DQCh. 4 - Prob. 1QSCh. 4 - Prob. 2QSCh. 4 - Prob. 3QSCh. 4 - Prob. 4QSCh. 4 - Prob. 5QSCh. 4 - Prob. 6QSCh. 4 - Prob. 7QSCh. 4 - Prob. 8QSCh. 4 - Plant wide rate method P1 A manufacturer uses...Ch. 4 - Prob. 10QSCh. 4 - Prob. 11QSCh. 4 - Prob. 12QSCh. 4 - Prob. 13QSCh. 4 - Prob. 14QSCh. 4 - Prob. 15QSCh. 4 - Prob. 16QSCh. 4 - Exercise 17-17 Identifying activity levels C3...Ch. 4 - Prob. 2ECh. 4 - Exercise 17-1 Computing Plantwide overhead rates...Ch. 4 - Prob. 4ECh. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Exercise 17-5 Departmental overhead rates P2 Refer...Ch. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Prob. 16ECh. 4 - Exerciser 17-14 Activity-based costing P3 A2...Ch. 4 - Prob. 18ECh. 4 - Problem 17-1A Comparing costs using ABC with the...Ch. 4 - Prob. 2PSACh. 4 - Prob. 3PSACh. 4 - Prob. 4PSACh. 4 - Prob. 5PSACh. 4 - Prob. 1PSBCh. 4 - Prob. 2PSBCh. 4 - Prob. 3PSBCh. 4 - Prob. 4PSBCh. 4 - Prob. 5PSBCh. 4 - Prob. 4SPCh. 4 - Prob. 1AACh. 4 - Prob. 2AACh. 4 - Prob. 3AACh. 4 - Prob. 1BTNCh. 4 - Prob. 2BTNCh. 4 - Accounting professionals who for private companies...Ch. 4 - Prob. 4BTNCh. 4 - Prob. 5BTNCh. 4 - Visit and observe the processes of three different...
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- A company estimates its manufacturing overhead will be $750,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases? Budgeted direct labor hours: 60,000 Budgeted direct labor expense: $1,500,000 Estimated machine hours: 100,000arrow_forward(Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30 minutes per unit. The budgeted conversion costs for the manufacturing cell are 2,700,000 per year. The total labor minutes available are 600,000. During the year, the cell was able to produce 1.5 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). 3. CONCEPTUAL CONNECTION Discuss how this approach to assigning conversion costs can improve delivery time performance.arrow_forwardHart Manufacturing makes three products. Each product requires manufacturing operations in three departments: A, B, and C. The labor-hour requirements, by department, are as follows: During the next production period the labor-hours available are 450 in department A, 350 in department B, and 50 in department C. The profit contributions per unit are 25 for product 1, 28 for product 2, and 30 for product 3. a. Formulate a linear programming model for maximizing total profit contribution. b. Solve the linear program formulated in part (a). How much of each product should be produced, and what is the projected total profit contribution? c. After evaluating the solution obtained in part (b), one of the production supervisors noted that production setup costs had not been taken into account. She noted that setup costs are 400 for product 1, 550 for product 2, and 600 for product 3. If the solution developed in part (b) is to be used, what is the total profit contribution after taking into account the setup costs? d. Management realized that the optimal product mix, taking setup costs into account, might be different from the one recommended in part (b). Formulate a mixed-integer linear program that takes setup costs provided in part (c) into account. Management also stated that we should not consider making more than 175 units of product 1, 150 units of product 2, or 140 units of product 3. e. Solve the mixed-integer linear program formulated in part (d). How much of each product should be produced and what is the projected total profit contribution? Compare this profit contribution to that obtained in part (c).arrow_forward
- Factory overhead cost budget Nutty Candy Company budgeted the following costs for anticipated production for August: Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only factory fixed costs.arrow_forward(Appendix 11A) Manufacturing Cycle Efficiency Ventris Company found that one of its manufacturing cells had actual cycle time of 15 minutes per unit. The theoretical cycle time for this cell was 9 minutes per unit. Required: 1. Calculate the amount of processing time per unit and the amount of nonprocessing time per unit. 2. Calculate the MCE.arrow_forwardes D ♪ Mc Graw Classes N Netflix Activity Assembly Product design Electricity Setup Total Craftmore Machining reports the following budgeted overhead cost and related data for this year. Budgeted Cost $ 477,750 73,500 24,500 61,250 $ 637,000 Activity Cost Driver Direct labor hours (DLH) Engineering hours (EH) Machine hours (MH) Setups Required 1 25 Required 2 Dashboard Activity Cost Driver Direct labor hours (DLH) Engineering hours (EH) Machine hours (MH) Setups Required: 1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 13,000 direct labor hours. 2. Job 31 used 320 direct labor hours and Job 42 used 560 direct labor hours. Allocate overhead cost to each job using the single plantwide overhead rate from part 1. 3. Compute an activity rate for each activity using activity-based costing. 4. Allocate overhead costs to Job 31 and Job 42 using activity-based costing. 80 Job 31 Activity Usage Required 3 320 35 60 5 Complete this question by…arrow_forward
- Question 140 A company has a standard costing system that applies overhead using machine hours. Each item produced requires 2 hours of machine time and the budgeted level of activity is 1,500 machine hours. The predetermined overhead rate for fixed overhead is $4.40 per machine hour. The flexible budget for manufacturing overhead is as follows: Per MH Variable overhead costs Fixed overhead cost Total overhead costs The most recent year had the following results: Required: Calculate the following: Machine Hours: $ 1.65 $ $ Actual number of units produced Actual machine hours worked Actual variable overhead costs Actual fixed overhead costs 1,000 1,650 $ 6,600 8.250 $ 1,500 2,475 $ 6.600 2.075 $ 740 1,554 $2,550 $6,400 2.000 3,300 6,600 9.900arrow_forwardView Policies Current Attempt in Progress A company expected its annual overhead costs to be $692920 and machine hours to equal 101900 hours. Actual overhead was $744100, and actual machine hours totalled 97400 hours. How much is the company's predetermined overhead rate to the nearest cent, assuming overhead is applied based on machine hours? O $7.30 O $6.80 O $7.64 O $7.11 e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answerarrow_forwardCornerstones of Cost Management 4th Ed. - Chapter 4 Scenario IV: Goodmark Company produces two types of birthday cards: scented and regular. Expected product data for the coming year are given below. Overhead costs are identified by activity. Scented Cards Regular Cards Total Units produced 20,000 200,000 - Prime costs $160,000 $1,500,000 $1,660,000 Direct labor hours 20,000 160,000 180,000 Number of setups 60 40 100 Machine hours 10,000 80,000 90,000 Inspection hours 2,000 16,000 18,000 Number of moves 180 120 300 Overhead costs: Setting up equipment $240,000 Moving materials 120,000 Machining 200,000 Inspecting products 160,000 Required: 1. Answer the following questions: a. Calculate the activity consumption ratios for Scented cards (round to two decimal places). Setups: Moving materials: Machining: Inspection: b. If only one rate based on direct labor hours were used to assign overhead, Scented Cards would receive…arrow_forward
- AaBbCcDd AaBbCcDd AABBC AaBbCcL 三、 v 1 Normal 1 No Spac... Heading 1. Heading 2 華 Paragraph Styles 8. Jumpst Corporation uses the cost formula Y = $5,000 + $3.00X for the maintenance cost in Department B, where X is machine-hours. The August budget is based on 10,000 hours of planned machine time. Maintenance cost expected to be incurred during August is: A. $30,000 B. $50,300 C. $31,500 D. $35,000 9. Muscat company, reported the following results for January: Number of units 10,000 Selling price Total Variable selling expense Total Variable administrative expense Total fixed selling expense Total fixed administrative expense Merchandise Beginning $10 $7,000 $10,000 $20,000 $8,000 $5,000 Merchandise Purchase $50,000 $10,000 Merchandise Ending Based on traditional income statement Muscat company's net profit will be? A. $10,000 B. $15,000 C. $55,000 D. $18,000 10. Which of the following statement is correct about managerial accounting? A. Its prepared on annual basis. B. Creditors are…arrow_forwardChange A company is thinking about changing from a traditional absorption costing approach, based on machine hours, to an activity based costing system. Its three products are usually produced in batches of 10 items. Details are as follows: J K L Budget (units) 300 240 460 Direct material £50 £70 £60 Direct labour £20 £25 £16 Machine hours 3 5 2 Material requisitions 25 25 25 Orders from customers 15 12 23 Total production overheads budgeted are as follows: £ Quality control related 2,772 Stores and raw material related 6,300 Despatch related 9,702 Machine maintenance related 14,826 Quality inspections are carried out twice during each production run. Required: Calculate the unit cost of each product under both the traditional approach and activity based costing.arrow_forwardQuestion 12 Stingrays Company applies overhead to products using a predetermined overhead rate based on machine hours. The tolong pertanto the ar Budgeted manufacturing overhead: $45,000 Actual manufacturing overhead: $51,000 Budgeted machine hours: 200 Actual machine hours: 150 How much is overhead applied to products during the year? O $60,000 O $38,250 O $33,750 O $51,000arrow_forward
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