Cullumber Inc. manufactures and distributes three types of water skis: beginner, intermediate, and advanced. Production is highly automated for the beginner model, whereas the intermediate and advanced models require increasing degrees of labour, depending on the shaping and finishing processes. Cullumber applies all indirect costs to production using a single predetermined overhead (OH) rate based on direct labour hours (DLH). Management estimates that 30,600 DLH will be used in the upcoming year, at a rate of $14 per hour. Assume that the following activity took place in the first month of the new year: Beginner Intermediate Advanced Number of units produced 20,400 8,200 3,100 Direct materials costs $21,200 $13,300 $8,200 Direct labour hours 500 1,000 2,000 Number of orders 6 4 3 Number of production runs 2 2 3 Kilograms of material used 8,200 3,300 1,500 Machine hours 1,200 310 200 Number of inspections 3 3 3 Number of units shipped 18,400 7,700 2,600 A consultant recently suggested that Cullumber switch to an activity-based costing system, and assembled the following information: Activities Recommended Cost Drivers Estimated OH Cost Cost Drivers Order processing Number of orders $ 61,000 100 orders Material handling Kilograms of materials used 610,000 122,000 kilograms Machine depreciation and maintenance Machine hours 420,000 20,000 hours Quality control Number of inspections 133,000 40 inspections $ 1,224,000 Calculate the production costs for each product in the first month of the upcoming year, using direct labour hours as the allocation base. Beginner Intermediate Advanced Materials $enter a dollar amount $enter a dollar amount $enter a dollar amount Labour enter a dollar amount enter a dollar amount enter a dollar amount MOH enter a dollar amount enter a dollar amount enter a dollar amount $enter a total amount $enter a total amount $enter a total amount Calculate the production costs for each product in the first month of the upcoming year, using activity-based costing. Beginner Intermediate Advanced Materials $enter a dollar amount $enter a dollar amount $enter a dollar amount Labour enter a dollar amount enter a dollar amount enter a dollar amount ABC overhead applied enter a dollar amount enter a dollar amount enter a dollar amount $enter a total amount $enter a total amount $enter a total amount Compare your answers in parts (a) and (b). Is the overhead charged to each product the same under each method? The amount charged to each product for overhead is select an option under the two methods.

Cullumber Inc. manufactures and distributes three types of water skis: beginner, intermediate, and advanced. Production is highly automated for the beginner model, whereas the intermediate and advanced models require increasing degrees of labour, depending on the shaping and finishing processes. Cullumber applies all indirect costs to production using a single predetermined overhead (OH) rate based on direct labour hours (DLH). Management estimates that 30,600 DLH will be used in the upcoming year, at a rate of $14 per hour. Assume that the following activity took place in the first month of the new year: Beginner Intermediate Advanced Number of units produced 20,400 8,200 3,100 Direct materials costs $21,200 $13,300 $8,200 Direct labour hours 500 1,000 2,000 Number of orders 6 4 3 Number of production runs 2 2 3 Kilograms of material used 8,200 3,300 1,500 Machine hours 1,200 310 200 Number of inspections 3 3 3 Number of units shipped 18,400 7,700 2,600 A consultant recently suggested that Cullumber switch to an activity-based costing system, and assembled the following information: Activities Recommended Cost Drivers Estimated OH Cost Cost Drivers Order processing Number of orders $ 61,000 100 orders Material handling Kilograms of materials used 610,000 122,000 kilograms Machine depreciation and maintenance Machine hours 420,000 20,000 hours Quality control Number of inspections 133,000 40 inspections $ 1,224,000 Calculate the production costs for each product in the first month of the upcoming year, using direct labour hours as the allocation base. Beginner Intermediate Advanced Materials $enter a dollar amount $enter a dollar amount $enter a dollar amount Labour enter a dollar amount enter a dollar amount enter a dollar amount MOH enter a dollar amount enter a dollar amount enter a dollar amount $enter a total amount $enter a total amount $enter a total amount Calculate the production costs for each product in the first month of the upcoming year, using activity-based costing. Beginner Intermediate Advanced Materials $enter a dollar amount $enter a dollar amount $enter a dollar amount Labour enter a dollar amount enter a dollar amount enter a dollar amount ABC overhead applied enter a dollar amount enter a dollar amount enter a dollar amount $enter a total amount $enter a total amount $enter a total amount Compare your answers in parts (a) and (b). Is the overhead charged to each product the same under each method? The amount charged to each product for overhead is select an option under the two methods.

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Description: Cullumber Inc. manufactures and distributes three types of water skis: beginner, intermediate, and advanced. Production is highly automated for the beginner model, whereas the intermediate and advanced models require increasing degrees of labour, dep

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 7E: The management of Nova Industries Inc. manufactures gasoline and diesel engines through two...

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	Beginner	Intermediate	Advanced
Number of units produced	20,400	8,200	3,100
Direct materials costs	$21,200	$13,300	$8,200
Direct labour hours	500	1,000	2,000
Number of orders	6	4	3
Number of production runs	2	2	3
Kilograms of material used	8,200	3,300	1,500
Machine hours	1,200	310	200
Number of inspections	3	3	3
Number of units shipped	18,400	7,700	2,600

A consultant recently suggested that Cullumber switch to an activity-based costing system, and assembled the following information:

Activities	Recommended Cost Drivers	Estimated OH Cost		Cost Drivers
Order processing	Number of orders		$	61,000	100	orders
Material handling	Kilograms of materials used			610,000	122,000	kilograms
Machine depreciation and maintenance	Machine hours			420,000	20,000	hours
Quality control	Number of inspections			133,000	40	inspections
			$	1,224,000

Calculate the production costs for each product in the first month of the upcoming year, using direct labour hours as the allocation base.

	Beginner	Intermediate	Advanced
Materials	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount
Labour	enter a dollar amount	enter a dollar amount	enter a dollar amount
MOH	enter a dollar amount	enter a dollar amount	enter a dollar amount
	$enter a total amount	$enter a total amount	$enter a total amount

Calculate the production costs for each product in the first month of the upcoming year, using activity-based costing.

	Beginner	Intermediate	Advanced
Materials	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount
Labour	enter a dollar amount	enter a dollar amount	enter a dollar amount
ABC overhead applied	enter a dollar amount	enter a dollar amount	enter a dollar amount
	$enter a total amount	$enter a total amount	$enter a total amount

Compare your answers in parts (a) and (b). Is the overhead charged to each product the same under each method?

The amount charged to each product for overhead is select an option under the two methods.

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