Ore 5Thomton Company makes two types of circuit boards. One is a high-caliber board designed to accomplish the most demanding tasksthe other is a low-caliber board designed to provide limited service at an affordable price. During its most recent accounting period,Thornton incurred $330,000 of inspection cost. Thornton recently established an activity-based costing system that classifies itsactivities into four categories Categories and appropriate cost drivers followeBookPHILReferencesHigh caliberLow caliberTotalDirect Laber Number ofHoursBatches205,00022,00010,000(a) Unit-level activities(b) Batch-level activities(c)Product-level activities(d) Facility level activitiesRequiredAllocate the inspection cost between the two products assuming that it is driven by (a) unit-level activities, (b) batch-level activities, (c)product-level activities, or (d) facility-level activities. Note that each allocation represents a separate alternative. In other words, the$330,000 of inspection cost will be allocated four times, once for each cost driver. (Do not round Intermediate calculations.)Allocated CostNumber ofInspectorsHigh-CaliberBoardsSumber ofSquare Feet65,000100,000165.000Low-CaliberBoardsCheck my work

Inspection cost is an indirect cost that needs to be allocated. It is to be allocated as per the…

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2,000 0.000 20 40 11 45,000 100,000 105.000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 1CE: Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and...

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Privott, Inc., manufactures and sells two products: Product Z9 and Product N0. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product Z9 Product N0 Total Labor-related DLHs $ 327,018 6,700 3,300 10,000 Product testing tests 47,247 550 650 1,200 Order size MHs 472,608 4,300 4,600 8,900 $ 846,873 The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to: Multiple Choice A. $72.69 per DLH B. $705.73 per DLH C. $85.90 per DLH D. $32.70 per DLH
Coronado Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an activity-based costing system. The traditional and the activity-based costing systems assign the same amount of direct materials and direct labor costs. Products Product 540X Product 137Y Product 249S (a) Sales Revenue $210,000 Product 137Y * Your answer is incorrect. Product 540X $ LA LA 166,000 LA 94,000 Product 249S $ Total Costs Traditional $59,000 For each product line, compute operating income using the traditional costing system. 49,000 17,000 160060 131040 ABC 53900 $49,940 34,960 40,100
Moistner, Inc., manufactures and sells two products: Product E6 and Product W9. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours Product E6 700 7.0 4,900 Product W9 100 5.0 500 Total direct labor-hours 5,400 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product E6 Product W9 Total Labor-related DLHs $ 233,604 4,900 500 5,400 Machine setups setups 30,942 500 400 900 Order size MHs 712,045 4,200 4,300 8,500 $ 976,591 If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of…
Akhbar LLC uses ABC costing for its products “Deluxe’ and ‘Premium”. The total estimated factory overhead is divided into two activities. i) Purchase related overhead cost RO 10,000 ii) Quality inspection overhead cost RO 5000 The expected activities are 100 for purchase and 500 for quality inspection. Deluxe requires 60 purchase orders and 300 quality checks and Premium requires 40 purchase orders and 200 quality checks. Based on the information given, answer the following questions. The amount of overheads allocated to product Deluxe and Premium for quality inspection will be: a. RO 1000 and RO 3000 b. RO 3000 and RO 2000 c. RO 2000 and RO 3000 d. RO 1000 and RO 2000 Clear my choice Question 7 The amount of overheads allocated to the product Deluxe and Premium for purchase cost will be: a. RO 4000 and RO 6000 b. RO 6000 and RO 4000 c. RO 3000 and RO 5000 d. RO 5000 and RO 3000
Vanvalkenburg, Inc., manufactures and sells two products: Product Q5 and Product JO. The company has an actvity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Overhead Activity Cost Pools Labor-related Measures Cost Product 05 Product J0 Total DLHS $191,748 70,536 295,592 3,000 300 4,300 2,800 5,800 Production orders Order size orders 500 800 MHs 4,500 8,800 $557,876 The activity rate for the Production Orders activity cost pool under activity-based costing is closest to: Multiple Cholce $63.40 per order S6874 per order S8817 per oroer 92 F AQI 61 pe here to search DELL 3.
Ivanhoe Inc. has conducted the following analysis related to its product lines using a traditional costing system (volume-based) and an activity-based costing system. Both the traditional and activity-based costing systems include direct materials and direct labour costs. Products Product 440X Product 137Y Product 249S (a) Sales Revenue $201,000 172,000 Operating income 87,000 Total Costs Traditional $55,000 74,000 26,000 Additional information related to product usage by these pools is as follows: ABC $50,036 70,668 34,296 For each product line, calculate operating income using the traditional costing system. Product 440X Traditional costing system $ Product 137Y $ Product 249S
Akhbar LLC uses ABC costing for its products “Deluxe’ and ‘Premium”. The total estimated factory overhead is divided into two activities. i) Purchase related overhead cost RO 10,000ii) Quality inspection overhead cost RO 5000The expected activities are 100 for purchase and 500 for quality inspection. Deluxe requires 60 purchase orders and 300 quality checks and Premium requires 40 purchase orders and 200 quality checks. Based on the information given, answer the following question The amount of overheads allocated to the product Deluxe and Premium for purchase cost will be?
Required information [The following information applies to the questions displayed below.] Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the company's five activity cost pools: Activity Cost Pool Labor-related Purchase orders Product testing Template etching General factory Activity Cost Pool Labor-related (DLHS) Activity Measure Product A Product B Product C Product D Direct labor-hours Number of orders Number of tests Number of templates Machine-hours Total Overhead Cost Expected Overhead Cost $ 30,115 $ 2,320 $ 6,930 $ 870 $ 65,100 2. The expected activity for the year was distributed among the company's four products as follows: Product A 625 30 190 Expected Activity 1,585 DLHS Product B 160 Purchase orders (orders) 190 Product testing (tests) 55 Template etching (templates) 17 3 General factory (MHS) 3,600 1,700 2,300 Using the ABC data, determine the total amount…
Durban Metal Products makes specialty metal parts and uses activity-based costing for internal decision-making purposes. The company has four activity cost pools as follows: Activity Cost Pool Order size Customer orders Product testing Selling Activity Measure Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls The company's owner wants to know the cost of a customer order requiring 200 direct labor-hours, 11 hours of product testing, and 5 sales calls. Required: What is the total overhead cost assigned to this order? Activity Cost Pool Order size Customer orders Product testing Selling Total overhead cost Activity Rate $ 17.90 per direct labor-hour $ 351.00 per customer order $ 77.00 per testing hour $ 1,496.00 per sales call ABC Cost
Fisher Fixtures manufactures three types of lighting fixtures, with model names of Silver, Gold, and Platinum. It applies all indirect costs according to an annual predetermined rate based on direct labor-hours. The plant controller has recommended that the company switch to an activity-based costing system. The controller's staff prepared the following cost estimates for next year (year 2) for the recommended cost drivers. Activity Recommended Cost Driver Estimated Cost Estimated Cost Driver Activity Purchasing material Number of purchase orders $ 121,200 240 purchase orders Receiving material Direct materials cost 225,600 $ 2,820,000 Setting up equipment Number of production runs 219,360 120 runs Machine depreciation and maintenance Machine-hours 75,540 15,108 hours Ensuring regulatory compliance Number of inspections 437,400 54 inspections Shipping Number of units shipped 1,058,400 588,000 units Total estimated cost $ 2,137,500 In addition, management…
Kitchen Supply, Inc. (KSI), manufactures three types of flatware: institutional, standard, and silver. It applies all indirect costs according to a predetermined rate based on direct labor-hours. A consultant recently suggested that the company switch to an activity-based costing system and prepared the following cost estimates for year 2 for the recommended cost drivers. Activity RecommendedCost Driver EstimatedCost Estimated CostDriver Activity Processing orders Number of orders $ 46,000 200 orders Setting up production Number of production runs 144,000 80 runs Handling materials Pounds of materials used 264,000 120,000 pounds Machine depreciation and maintenance Machine-hours 240,000 12,000 hours Performing quality control Number of inspections 52,000 40 inspections Packing Number of units 144,000 480,000 units Total estimated cost $ 890,000 In addition, management estimated 7,500 direct labor-hours for year 2.…
Required information [The following information applies to the questions displayed below.] Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the company's five activity cost pools: Activity Cost Pool Labor-related Purchase orders Product testing Template etching General factory Activity Cost Pool Labor-related (DLHs) Purchase orders (orders) Product testing (tests) Template etching (templates) General factory (MHs) Activity Measure. Direct labor-hours Number of orders Number of tests Number of templates Machine-hours Product A Product B Product C Product D Total Overhead Cost Expected Overhead Cost 2. The expected activity for the year was distributed among the company's four products as follows: Product A 500 60 260 0 3,900 $ 40,320 $1,650 $ 7,700 $ 1,260 $ 69,000 Expected Activity 2,240 DLHS Expected Activity Product B 140 120 60 28 3,200 550 orders 385 tests 45…