Computing Overhead using Activity Based Costing; Company A: Estimated Annual Overhead: $950,000Overhead Allocated to Cost Pools: Machine Setups: 22%; Machining: 68%; Inspections: 10%;**Overhead Rate - Round to hundredthsCost PoolsMachine SetupsMachining# of SetupsMachine HoursCost DriversOverhead Allocated toCost PoolsExpected Use of DriversOverhead Rate perDriver3200Inspections# of Inspections50,0004000Use of DriversUse of DriversCost DriversProduct AProduct BOverhead Allocated toProduct AOverhead Allocated toProduct B# of Setups11002100Machine Hours32,000# of Inspections280018,0001200Total Overhead Applied to ProductsUnits Produced: Product A: 45,000; Product B: 80,000**Round to nearest hundredth**Overhead Cost per Unit: Product A:Product B:$75.00DM per unit: $18.50

Name: Computing Overhead using Activity Based Costing; Company A: Estimated
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Description: Computing Overhead using Activity Based Costing; Company A: Estimated Annual Overhead: $950,000Overhead Allocated to Cost Pools: Machine Setups: 22%; Machining: 68%; Inspections: 10%;**Overhead Rate - Round to hundredthsCost PoolsMachine SetupsMachi

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Computing Overhead using Activity Based Costing; Company A: Estimated Annual Overhead: $950,000 Overhead Allocated to Cost Pools: Machine Setups: 22%; Machining: 68%; Inspections: 10%; **Overhead Rate - Round to hundredths Cost Pools Cost Drivers Overhead Allocated to Cost Pools Expected Use of Drivers Overhead Rate per Driver Machine Setups # of Setups 3200 Machining Machine Hours 50,000 Inspections # of Inspections 4000 Use of Drivers Use of Drivers Overhead Allocated to Cost Drivers Product A Product B Product A Overhead Allocated to Product B # of Setups 1100 Machine Hours 32,000 2100 18,000

Computing Overhead using Activity Based Costing; Company A: Estimated Annual Overhead: $950,000 Overhead Allocated to Cost Pools: Machine Setups: 22%; Machining: 68%; Inspections: 10%; **Overhead Rate - Round to hundredths Cost Pools Cost Drivers Overhead Allocated to Cost Pools Expected Use of Drivers Overhead Rate per Driver Machine Setups # of Setups 3200 Machining Machine Hours 50,000 Inspections # of Inspections 4000 Use of Drivers Use of Drivers Overhead Allocated to Cost Drivers Product A Product B Product A Overhead Allocated to Product B # of Setups 1100 Machine Hours 32,000 2100 18,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter6: Process Costing

Section: Chapter Questions

Problem 24E: Baxter Company has two processing departments: Assembly and Finishing. A predetermined overhead rate...

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Baxter Company has two processing departments: Assembly and Finishing. A predetermined overhead rate of 10 per DLH is used to assign overhead to production. The company experienced the following operating activity for April: a. Materials issued to Assembly, 24,000 b. Direct labor cost: Assembly, 500 hours at 9.20 per hour; Finishing, 400 hours at 8 per hour c. Overhead applied to production d. Goods transferred to Finishing, 32,500 e. Goods transferred to finished goods warehouse, 20,500 f. Actual overhead incurred, 10,000 Required: 1. Prepare the required journal entries for the preceding transactions. 2. Assuming Assembly and Finishing have no beginning work-in-process inventories, determine the cost of each departments ending work-in-process inventories.
Data Allocation base Machine-hours Estimated manufacturing overhead cost $300,000 Estimated total amount of the allocation base 75,000 machine-hours Actual manufacturing overhead cost $290,000 Actual total amount of the allocation base 68,000 machine-hours Enter a formula into each of the cells marked with a ? below Computation of the predetermined overhead rate Estimated manufacturing overhead cost ? Estimated total amount of the allocation base ? machine-hours Predetermined overhead rate ? per machine-hour Computation of underapplied or overapplied manufacturing overhead Actual manufacturing overhead cost ? Manufacturing overhead cost applied to Work in Process during the year: Predetermined overhead rate ? per machine-hour Actual total amount of the allocation base ? machine-hours Manufacturing overhead applied ? Underapplied (overapplied) manufacturing overhead ?
Accounting Question
Activity Allocation Base Predetermined Overhead Allocation Rate Materials handling Number of parts $8.00 per part Machine setup Number of setups 800.00 per setup Insertion of parts Number of parts 28.00 per part Finishing Number of finishing hours 60.00 per hour Standard Deluxe Parts per rim 8.0 9.0 Setups per 500 rims 12.0 12.0 Finishing hours per rim 2.0 4.5 Total direct labor hours per rim 6.0 9.0 Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2024: LOADING... (Click the icon to view the allocation rates.) Elkin produces two wheel rim models: standard and deluxe. Expected data for 2024 Part 1 The company expects to produce 500 units of each model during the year. Requirement 1. Compute the total estimated indirect manufacturing cost for 2024. Begin by selecting the formula to compute the total estimated overhead (OH) costs.…
analysis using activity-based costing (ABC). The management accountant accumulates the following information about overhead for the year ended December 31, 2019. Activity Cost Pools Cost Drivers Estimated Expected Use of Overhead Cost Drivers Purchasing Number of $1,200,000 40,000 orders Machine setups Number of 900,000 18,000 setups Machine hours Machining Quality Control 4,800,000 700,000 120,000 28,000 Number of inspections The cost drivers used: Cost Drivers TRI-X Product Purchase orders Machine setupS Machine hours Inspections 17,000 5,000 75,000 11,000 Required: 1. Calculate the activity rates for each of the overhead items using the four cost drivers. 2. Using the rates in (1) determine the unit cost for TRI-X 3. Calculate the gross profit of each model of TRI-X based on ABC costings and recommend whether or not TRI-X should be discontinued.
Manufacturing Overhead Indirect Materials Supervision Building depreciation Maintenance Purchasing Inspection Amount $ 22,100 45,368 67,200 23,800 19,812 16,320 Cost Driver Number of Units Number of Inspections Square Footage Direct Labor Hours Number of Purchase Orders Number of Inspections Electronic Keyboard 700 700 14,000 9,800 700 700 Digital Piano 300 900 6,000 4,200 900 900 Create a spreadsheet with an output section that: (i) determines the six overhead application rates to use under activity-based costing (be sure to label these!) (j) determines the total cost to manufacture one unit electronic keyboard using activity-based costing (show material, labor and overhead separately to enhance manager usefulness) (k) determines the total cost to manufacture one unit digital piano using activity-based costing (show material, labor and overhead separately to enhance manager usefulness) (L) calculates a suggested new selling price for each item based on recent industry reports that…
Activity Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours Cost Assigned to Pool Basic Model Timing Model $ 3,552 $ 35,200 Complete this question by entering your answers in the tabs below. Overhead Assigned Overhead Accinned Required: 1. Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. 2. Calculate the activity rates for each activity pool in Hazelnut's ABC system. 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. Required 5 Quantity or Amount Consumed by Basic $ 120,900 5,200 hours 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? 10 moves 220 inspections machine Required 1…
Activity Cost Pool Cost Driver EstimatedOverhead Use perProduct A Use perProduct B Machine Setups Setups $144,000 6,000 2,000 Assembly Number of Parts 71,000 25,000 46,000 Machine Maintenance Machine Hours 200,000 13,000 37,000 Compare the overhead allocation using (A) the traditional allocation method and (B) the activity-based costing method. (Hint: the traditional method uses machine hours as the allocation base.) For those boxes in which you must enter subtractive or negative numbers use a minus sign.
Rocky Mountain Corporation makes two types of hiking boots-Xactive and Pathbreaker. Data concerning these two product lines appear below: Direct materials per unit Direct labor cost per unit Direct labor-hours per unit Estimated annual production and sales Xactive $ 65.70 $ 19.10 1.4 DLHS 34,000 units Pathbreaker $ 51.90 $ 13.90 1 DLHS 84,000 units The company has a conventional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours $2,750,440 131,600 DLHS Required: 1-a. Compute the predetermined overhead rate bašed on direct labor-hours. 1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. 2. The company is considering replacing its conventional costing system with an activity-based costing system that…
Approximately Relevant ABC Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Setting up equipment Ordering materials Machining Receiving Expected Cost Activity Driver $126,000 Number of setups 18,000 Number of orders 126,000 Machine hours 30,000 Receiving hours Units completed Number of setups Receiving hours Required: 1. Determine the total overhead assigned to each product using the four activity drivers. 2. Determine the total overhead assigned to each model using the two most expensive activities. The costs of the two relatively inexpensive activities are allocated to the two expensive activities in proportion to their costs. 3. Using ABC as the benchmark, calculate the percentage error and comment on the accuracy of the reduced system. Explain why this approach may be desirable. Exercise 4-23 Equally Accurate Reduced ABC System Refer to Exercise 4-22. Required: 1. Calculate the global consumption ratios for…
Indirect cost allocationCalculate the overhead surcharges for material, manufacturing & admin based on the followinginformation (numbers in kEUR, unless stated otherwise):Information on direct costsDirect material costs 5,000Direct manufacturing costs 7,500 Information on indirect costsEnergy 2,100Maintenance 500Vehicles 360Material 240Manufacturing 1,200Admin 750 Information on cost allocationEnergy 15,000 MWh manufacturing, 3,500 MWh maintenance, 1500 MWh material, 1,000 MWh admin Maintenance 5 hrs vehicles, 35 hrs manufacturing, 5 hrs material, 5 hrs adminVehicles 3 cars material, 6 cars manufacturing, 21 cars admin
Allocation ratios: General Factory Receiving Assembly Finishing Square footage Number of receiving orders Allocations: General Factory Receiving Assembly Finishing Direct overhead cost $ $4 General Factory Receiving Total 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.) Overhead Rate Assembly per direct labor hour Finishing per direct labor hour