5-22 Plant-wide, department, and activity-cost rates. Acclaim Inc. makes two styles of trophies, basic and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce 10.000 basic trophies and 5,000 deluxe trophies, Manufacturing takes place in two production departments: forming and assembly. In the forming department, indirect manufacturing costs are accumulated in two cost pools, setup and general overhead. In the assembly department, all indirect manufacturing costs are accumulated in one general overhead cost pool. The basic trophies are formed in batches of 200 but be- cause of the more intricate detail of the deluxe trophies, they are formed in batches of 50. The controller has asked you to compare plant-wide, department, and activity-based cost allocation. Acclaim Budgeted Information for the Year Ended November 30, 2017 Forming Department Basic Deluxe Total $60,000 30,000 Direct materials $35,000 20,000 $95,000 Direct manufacturing labor Overhead costs Setup General overhead 50,000 48,000 32,000 Basic Deluxe Total Assembly Department Direct materials $5,000 $10,000 $15,000 40,000 Direct manufacturing labor 15,000 25,000 Overhead costs General overhead 40,000 1. Calculate the budgeted unit cost of basic and deluxe trophies based on a single plant-wide overhead rate, if total overhead is allocated based on total direct costs. (Don't forget to include direct material and direct manufacturing labor cost in your unit cost calculation.) 2. Calculate the budgeted unit cost of basic and deluxe trophies based on departmental overhead rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct manufacturing labor costs of the assembly department. 3. Calculate the budgeted unit cost of basic and deluxe trophies if Acclaim allocates overhead costs in each department using activity-based costing, where setup costs are allocated based on number of batches and general overhead costs for each department are allocated based on direct manufacturing labor costs of each department. lifforont ponte

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...
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two clients for May 2017?
sional time spent on each client
tead of 30% of professional
5-22 Plant-wide, department, and activity-cost rates. Acclaim Inc. makes two styles of trophies, basic
and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce
10.000 basic trophies and 5,000 deluxe trophies. Manufacturing takes place in two production departments:
forming and assembly. In the forming department, indirect manufacturing costs are accumulated in two
cost pools, setup and general overhead. In the assembly department, all indirect manufacturing costs are
accumulated in one general overhead cost pool. The basic trophies are formed in batches of 200 but be-
cause of the more intricate detail of the deluxe trophies, they are formed in batches of 50.
The controller has asked you to compare plant-wide, department, and activity-based cost allocation.
Enterprises
do
Acclaim Budgeted Information for the Year Ended November 30, 2017
Forming Department
Basic
Deluxe
Total
Direct materials
$60,000
$35,000
$95,000
Direct manufacturing labor
30,000
20,000
50,000
Overhead costs
Setup
48,000
rises for May 2017?
olls t General overhead
p10 dose of hetols
32,000
Assembly Department
Basic
Deluxe
Total
Direct materials
$ 5,000
$10,000
$15,000
Direct manufacturing labor
15,000
25,000
40,000
nd 2.
I labor-hours is the more
Overhead costs
en
General overhead
40,000
1. Calculate the budgeted unit cost of basic and deluxe trophies based on a single plant-wide overhead
rate, if total overhead is allocated based on total direct costs. (Don't forget to include direct material
and direct manufacturing labor cost in your unit cost calculation.)
2. Calculate the budgeted unit cost of basic and deluxe trophies based on departmental overhead rates,
where forming department overhead costs are allocated based on direct manufacturing labor costs of
the forming department and assembly department overhead costs are allocated based on total direct
manufacturing labor costs of the assembly department.
3. Calculate the budgeted unit cost of basic and deluxe trophies if Acclaim allocates overhead costs in
each department using activity-based costing, where setup costs are allocated based on number of
batches and general overhead costs for each department are allocated based on direct manufacturing
labor costs of each department.
4. Explain briefly why plant-wide, department, and activity-based costing systems show different costs
for the basic and deluxe trophies. Which system would you recommend and why?
Required
y (RC) designs and pro-
000. RC's simple costing
on machine-hours and
ained of being charged
examine the consump-
artments that consume
artment personnel and
Transcribed Image Text:two clients for May 2017? sional time spent on each client tead of 30% of professional 5-22 Plant-wide, department, and activity-cost rates. Acclaim Inc. makes two styles of trophies, basic and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce 10.000 basic trophies and 5,000 deluxe trophies. Manufacturing takes place in two production departments: forming and assembly. In the forming department, indirect manufacturing costs are accumulated in two cost pools, setup and general overhead. In the assembly department, all indirect manufacturing costs are accumulated in one general overhead cost pool. The basic trophies are formed in batches of 200 but be- cause of the more intricate detail of the deluxe trophies, they are formed in batches of 50. The controller has asked you to compare plant-wide, department, and activity-based cost allocation. Enterprises do Acclaim Budgeted Information for the Year Ended November 30, 2017 Forming Department Basic Deluxe Total Direct materials $60,000 $35,000 $95,000 Direct manufacturing labor 30,000 20,000 50,000 Overhead costs Setup 48,000 rises for May 2017? olls t General overhead p10 dose of hetols 32,000 Assembly Department Basic Deluxe Total Direct materials $ 5,000 $10,000 $15,000 Direct manufacturing labor 15,000 25,000 40,000 nd 2. I labor-hours is the more Overhead costs en General overhead 40,000 1. Calculate the budgeted unit cost of basic and deluxe trophies based on a single plant-wide overhead rate, if total overhead is allocated based on total direct costs. (Don't forget to include direct material and direct manufacturing labor cost in your unit cost calculation.) 2. Calculate the budgeted unit cost of basic and deluxe trophies based on departmental overhead rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct manufacturing labor costs of the assembly department. 3. Calculate the budgeted unit cost of basic and deluxe trophies if Acclaim allocates overhead costs in each department using activity-based costing, where setup costs are allocated based on number of batches and general overhead costs for each department are allocated based on direct manufacturing labor costs of each department. 4. Explain briefly why plant-wide, department, and activity-based costing systems show different costs for the basic and deluxe trophies. Which system would you recommend and why? Required y (RC) designs and pro- 000. RC's simple costing on machine-hours and ained of being charged examine the consump- artments that consume artment personnel and
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