Homework Help is Here – Start Your Trial Now!
Business
Accounting
23. A plant has two categories of overhead: material handling and quality inspection. The costs expected for these categories for the coming year are as follows: Material handling Quality inspection P 100,000 P 300,000 The plant currently applied overhead using direct labor hours and expected actual capacity. This figure is 50,000 direct labor hours. The plant manager has been asked to submit a bid and has assembled the following data on the proposed budget for the potential job: Direct materials Direct labor Factory overhead Number of material movements Number of inspections P 3,700 P 7,000 10 5 ? The manager has been told that many competitors use an activity-based costing approach to assign overhead to jobs. Before submitting a bid, the manager wants to assess the effects of this alternative approach. The manager estimates that the expected number of material moves for all jobs during the year is 1,000; 5,000 quality inspections are expected to be performed. Assuming the bid price of full manufacturing cost plus 25 percent, what should be the bid under ABC approach? a. P 12,000 b. P 12,325 C. P 15,000 d. P 18,700

23. A plant has two categories of overhead: material handling and quality inspection. The costs expected for these categories for the coming year are as follows: Material handling Quality inspection P 100,000 P 300,000 The plant currently applied overhead using direct labor hours and expected actual capacity. This figure is 50,000 direct labor hours. The plant manager has been asked to submit a bid and has assembled the following data on the proposed budget for the potential job: Direct materials Direct labor Factory overhead Number of material movements Number of inspections P 3,700 P 7,000 10 5 ? The manager has been told that many competitors use an activity-based costing approach to assign overhead to jobs. Before submitting a bid, the manager wants to assess the effects of this alternative approach. The manager estimates that the expected number of material moves for all jobs during the year is 1,000; 5,000 quality inspections are expected to be performed. Assuming the bid price of full manufacturing cost plus 25 percent, what should be the bid under ABC approach? a. P 12,000 b. P 12,325 C. P 15,000 d. P 18,700

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 15E: Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing...
See similar textbooks
icon
Related questions
Question

23

 

23. A plant has two categories of overhead: material handling and quality inspection. The costs expected for these categories for the coming year are as follows: Material handling Quality inspection The plant currently applied overhead using direct labor hours and expected actual capacity. This figure is 50,000 direct labor hours. P 100,000 P 300,000 The plant manager has been asked to submit a bid and has assembled the following data on the proposed budget for the potential job: Direct materials Direct labor Factory overhead Number of material movements Number of inspections c. P 15,000 d. P 18,700 P P 10 5 3,700 7,000 ? The manager has been told that many competitors use an activity-based costing approach to assign overhead to jobs. Before submitting a bid, the manager wants to assess the effects of this alternative approach. The manager estimates that the expected number of material moves for all jobs during the year is 1,000; 5,000 quality inspections are expected to be performed. Assuming the bid price of full manufacturing cost plus 25 percent, what should be the bid under ABC approach? a. P 12,000 b. P 12,325
Transcribed Image Text:23. A plant has two categories of overhead: material handling and quality inspection. The costs expected for these categories for the coming year are as follows: Material handling Quality inspection The plant currently applied overhead using direct labor hours and expected actual capacity. This figure is 50,000 direct labor hours. P 100,000 P 300,000 The plant manager has been asked to submit a bid and has assembled the following data on the proposed budget for the potential job: Direct materials Direct labor Factory overhead Number of material movements Number of inspections c. P 15,000 d. P 18,700 P P 10 5 3,700 7,000 ? The manager has been told that many competitors use an activity-based costing approach to assign overhead to jobs. Before submitting a bid, the manager wants to assess the effects of this alternative approach. The manager estimates that the expected number of material moves for all jobs during the year is 1,000; 5,000 quality inspections are expected to be performed. Assuming the bid price of full manufacturing cost plus 25 percent, what should be the bid under ABC approach? a. P 12,000 b. P 12,325
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Market Efficiency
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
  • SEE MORE QUESTIONS
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
SEE MORE TEXTBOOKS