Cornerstone Exercise 7-31 Calculating ABC Unit Costs oqrmo gninobro9n ageaeaPerry National Bank has collected the following information for four activities and two types ofcredit cards:enwallokae she aitkop 7pilnquao.bobbonsisbbdo bns noiteanol2000 ei i bas 1251 orlu boliel oved aomoqmos srls to diod TOActivityDriverClassicGoldActivity RateProcessing transactionsPreparing statements re e Number of statementsAnswering questionsExer Providing ATMSTransactions processed8,000e 8,000 viirio/4,80016,00032,0004,800$0.150.90Number of calls3.0024,0009,600ATM transactions1.20There are 5,000 holders of Classic cards and 20,000 holders of the Gold cards.activities:Required: ese twohotion moldingCalculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards.TheCornerstone Exercise 7-32 Assigning Costs to ActivitiesBaker Company produces small engines for lawnmower producers. The accounts payable depart-ment at Baker has six clerks who process and pay supplier invoices. The total cost of their salariesis $320,000. The work distribution for the activities that they perform is as follows:berjupeLCalcylate the potivityActivityPercentage of Time ound to two dedimon Each Activity lo 1200 odi onimmsisun To two decimal plaCalculaie the activComparing source documentsA-sulsvnd5% x3 enotenemon activitResolving discrepancies000 082 709 20m Processing payment65gitivite0a vAallgrarlhaed ol sdioodRequired:aM edAssign the cost of labor to each of the three activities in theadaniblow.00.sgaihemdoned(uod gniblow 000,2) 000,00eaaccounts payable department.

Solution:- 1)Calculation of the unit cost for Classic as follows under:- Unit cost for classic…

Cornerstone Exercise 7-31Calculating ABC Unit Costs grmob gnitebnon B Perry National Bank has collected the following information for four activities and two types c credit cards:nslqor 90on ei ti bas 1251 ords bolist oved aono wollokes she aoitkoopilqquanlbobbonsisbbdio bns Activity sr lo diod 10 om Driver Classic Gold Activity Rate Processing transactions Preparing statements re e Number of statements Answering questions Providing ATMS Transactions processed 4,800 $0.15 8,000 8,000 viirio/4,800 16,000 32,000 0.90 Number of calls 24,000 9,600 3.00 Exer ATM transactions 1.20 There are 5,000 holders of Classic cards and 20,000 holders of the Gold cards. Required: Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards.

Cornerstone Exercise 7-31Calculating ABC Unit Costs grmob gnitebnon B Perry National Bank has collected the following information for four activities and two types c credit cards:nslqor 90on ei ti bas 1251 ords bolist oved aono wollokes she aoitkoopilqquanlbobbonsisbbdio bns Activity sr lo diod 10 om Driver Classic Gold Activity Rate Processing transactions Preparing statements re e Number of statements Answering questions Providing ATMS Transactions processed 4,800 $0.15 8,000 8,000 viirio/4,800 16,000 32,000 0.90 Number of calls 24,000 9,600 3.00 Exer ATM transactions 1.20 There are 5,000 holders of Classic cards and 20,000 holders of the Gold cards. Required: Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 4CE: Refer to Cornerstone Exercise 7.3. Now assume that Valron Company uses the sequential method to...

See similar textbooks

Similar questions

I. PROBLEM SOLVINGAnswer the following items on the space provided. Show your computations.At the beginning of 201A, ABC Company had the following standard costs for one (1) of its chemical products:Direct material (3 pounds at P3.20) P9.60Labor standard (0.9 hours at P9.00) 8.10Variable overhead (0.9 hours at P1.50) 1.35Fixed overhead (0.9 hours at P4.00) 3.60Total P22.65ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201Aare:Units produced 140,000 unitsMaterials purchased 421,175 lbs. at P3.30Materials used 421,000 lbs.Direct labor 128,750 hrs at P8.90Fixed overhead P517,525Variable overhead 218,000Required: Indicate whether conditions are favorable or unfavorable. 4. Labor rate variance (LRV)5. Labor efficiency variance (LEV)6. Variable overhead (VOH) rate variance7. VOH efficiency variance8. Fixed overhead (FOH) spending variance9. FOH volume variance
I. PROBLEM SOLVINGAnswer the following items on the space provided. Show your computations.At the beginning of 201A, ABC Company had the following standard costs for one (1) of its chemical products:Direct material (3 pounds at P3.20) P9.60Labor standard (0.9 hours at P9.00) 8.10Variable overhead (0.9 hours at P1.50) 1.35Fixed overhead (0.9 hours at P4.00) 3.60Total P22.65ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201Aare:Units produced 140,000 unitsMaterials purchased 421,175 lbs. at P3.30Materials used 421,000 lbs.Direct labor 128,750 hrs at P8.90Fixed overhead P517,525Variable overhead 218,000Required: Indicate whether conditions are favorable or unfavorable. 1. Material purchase price variance (MPPV)2. Material price usage variance (MPUV)3. Material quantity variance (MQV)4. Labor rate variance (LRV)5. Labor efficiency variance (LEV)6. Variable overhead (VOH) rate variance7. VOH efficiency variance8. Fixed overhead (FOH)…
Product cost concept of product pricing Based on the data presented in Exercise 12-15, assume that Willis Products Inc. uses the product cost concept of applying the cost-plus approach to product pricing. a.Determine the total manufacturing costs and the cost amount per unit for the production and sale of 200,000 units. b.Determine the product cost markup percentage per unit. Round to two decimal place. c.Determine the selling price per unit. Round to the nearest dollar.
Refer to Cornerstone Exercise 7.3. Now assume that Valron Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. 2. Using the sequential method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. (Round all allocated costs to the nearest dollar.) 3. What if the allocation ratios in Requirement 1 were rounded to six significant digits rather than four? How would that affect any rounding error in the allocation of costs?
Refer to Cornerstone Exercise 7.10. (Round percentages to four significant digits and cost allocations to the nearest dollar.) Required: 1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze. 2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. 3. What if it cost 2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to these three products?
Activity-based costing for a service company Wells Fargo insurance Services (WFIS) is an insurance brokerage company that classified insurance products as either easy or difficult. Easy and difficult products were defined as follows: Easy: Electronic claims, few inquiries, mature product Difficult: Paper claims, complex claims to process, many inquiries, a new product with complex options The company originally allocated processing and service expenses on the basis of revenue. Under this traditional allocation approach, the product profitability report revealed the following: Easy Product Difficult Product Total Revenue 600 400 1,000 Processing and service expenses 420 280 700 Income from operations 180 120 300 Operating income margin 30% 30% 30% WFIS decided to use activity-based costing to allocate the processing and service expenses. The following activity-based costing analysis of the same data illustrates a much different profit picture for the two types of products: Easy Product Difficult Product Total Revenue 600 400 1,000 Processing and service expenses 183 517 700 Income from operations 417 (117) 300 Operating income margin 70% (29%) 30% Explain why the activity-based profitability report reveals different information from the traditional sales allocation report. Source: Dan Patras and Kevin Clancy, ABC in the Service Industry: Product Line Profitability at Acordia, Inc. As Easy as ABC Newsletter, issue 12. Spring 1993
Budget performance report for a cost center Sneed Industries Company sells vehicle parts to manufacturers of heavy construction equipment. The Crane Division is organized as a cost center. The budget for the Crane Division for the month ended August 31, 20Y6, is as follows (in thousands): During August, the costs incurred in the Crane Division were as follows: Instructions For which costs might the director be expected to request supplemental reports?
Activity-based costing in an insurance company Umbrella Insurance Company carries three major lines of insurance: auto, workers' compensation, and homeowners. The company has prepared the following report for 20Y2: Management is concerned that the administrative expenses may make some of the insurance lines unprofitable. However, the administrative expenses have not been allocated to the insurance lines. The controller has suggested that the administrative expenses could be assigned to the insurance lines using activity-based costing. The administrative expenses are comprised of five activities. The activities and their rates are as follows: Activity-base usage data for each line of insurance were retrieved from the corporate records and are shown below. a.Complete the product profitability report through the administrative activities. b.Determine the underwriting income as a percent of premium revenue. C.Determine the Operating income as a percent of premium revenue, rounded to one decimal place. d.Interpret the report.
Communication The controller of New Wave Sounds Inc. prepared the following product profitability report for management, using activity-based costing methods for allocating both the factory overhead and the marketing expenses. As such, the controller has confidence in the accuracy of this report. Home Theater Speakers Wireless Speakers Wireless Headphones Total Sales 1,500,000 1,200,000 900,000 3,600,000 Cost of goods sold 1,050,000 720,000 810,000 2,580,000 Gross profit 450,000 480,000 90,000 1,020,000 Marketing expenses 600,000 120,000 72,000 792,000 Income from operations (150,000) 360,000 18,000 228,000 In addition, the controller interviewed the vice president of marketing, who provided the following insight into the company's three products: The home theater speakers are an older product that is highly recognized in the marketplace. The wireless speakers are a new product that was just recently bunched. The wireless headphones are a new technology that has no competition in the marketplace, and it is hoped that they will become an important future addition to the companys product portfolio. Initial indications are that the product is well received by customers. The controller believes that the manufacturing costs for all three products are in line with expectations. Based on the information provided: 1. Calculate the ratio of gross profit to sales and the ratio of income from operations to sales for each product. 2. Write a brief (one page) memo using the product profitability report and the calculations in (1) to make recommendations to management with respect to strategies for the three products.
Question # 1 Standard and the actual costs for direct materials and direct labor are given as under: Standard costs Direct materials 8,000 units at total direct material costs Rs. 40,000 Direct labor: 7,000 hours at Rs. 6 per hour Actual costs Direct materials 8,500 units at Rs. 4.5 per unit Direct labor: 6,500 hours at Rs. 6.25 per hour Required c. Entries in general journal to record the above information d. What do you realize whether the overall variation is in favorable or unfavorable?
MC Qu. 6-66 Swan, Inc. uses the high-low method to... Swan, Inc. uses the high-low method to analyze cost behavior. The company observed that at 17,000 machine hours of activity, total maintenance costs averaged $46.40 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $33.60. On the basis of this information, the fixed cost for Swan was: (Round your intermediate calculations to 2 decimal places and final answer to nearest dollar amount.) Multiple Choice $840,000. $680,000. $340,000. $108,800. $788,800.
TB MC Qu. 11-50 (Algo) Steven Parker owns and operates Steven's Septic Service and... Steven Parker owns and operates Steven's Septic Service and Legal Advice. Steven's two revenue generating (production) operations are supported by two service departments: Clerical and Janitorial. Costs in the service departments are allocated in the following order using the designated allocation bases:Clerical:Variable cost: expected number of work orders processedFixed cost: long-run average number of work orders processedJanitorial:Variable cost: labor hoursFixed cost: square footage of space occupiedAverage and expected activity levels for next month (June) are as follows: No. of Work Orders Expected Average Labor Hours Square Footage Septic Service 50 75 1,000 2,295 Legal advice 30 25 1,500 2,805 Clerical 15 15 510 1,710 Janitorial 5 25 310 1,110 Expected costs in the service departments for June are as follows: Clerical Janitorial Variable costs $ 15,400 $ 5,800…