Exercise 7-4 (Algo) Second-Stage Allocation [LO7-4] Klumper Corporation is a diversified manufacturer of industrial goods. The company's following six activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Activity Rates $ 11 per direct labor-hour 4 per machine-hour $ 50 per setup $ 150 per order $ 125 per shipment $ 850 per product Shipments Product sustaining Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders 200 2,000 975 40 3,000 30 13 13 Shipments Product sustaining 26 2 2 2.

Exercise 7-4 (Algo) Second-Stage Allocation [LO7-4] Klumper Corporation is a diversified manufacturer of industrial goods. The company's following six activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Activity Rates $ 11 per direct labor-hour 4 per machine-hour $ 50 per setup $ 150 per order $ 125 per shipment $ 850 per product Shipments Product sustaining Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders 200 2,000 975 40 3,000 30 13 13 Shipments Product sustaining 26 2 2 2.

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter18: Activity-Based Costing

Section: Chapter Questions

Problem 3ADM: Production run size and activity improvement Littlejohn, Inc. manufactures machined parts for the...

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Production run size and activity improvement Littlejohn, Inc. manufactures machined parts for the automotive industry. The activity cost associated with Part XX-10 is as follows: Activity Activity-Base Usage Activity Rate = Activity Cost Fabrication 250 dlh 80per dlh 20,000 Setup 10 setups 80 per setup 800 Production control 10 prod, runs 30 per prod, run 300 Moving 10 moves 25 per move 250 Total activity cost per unit 21,350 Estimated units of production 500 Activity cost per unit 42.70 Each unit requires 30 minutes of fabrication direct labor. Moreover, part XX-10 is manufactured in production run sizes of 50 units. Each production run is set up, scheduled (production control), and moved as a batch of 50 units. Management is considering improvements in the setup, production control, and moving activities in order to cut the production run sizes by half. As a result, the number of setups, production runs, and mows will double from 10 to 20. Such improvements are expected to speed the companys ability to respond to customer orders. Setup is reengineered so that it takes 60% of the original cost per setup. Production control software will allow production control effort and cost per production run to decline by 60%. Moving distance was reduced by 40%, thus reducing the cost per mow by the same amount. A. Determine the revised activity cost per unit under the proposed changes. B. Did these improvements reduce the activity cost per unit? C. What cost per unit for setup would be required for the solution in (A) to equal the base solution?
Exercise 7-4 (Algo) Second-Stage Allocation [LO7-4] Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $ 11 per direct labor-hour Machine processing $ 3 per machine-hour Machine setups $ 40 per setup Production orders $ 160 per order Shipments $ 125 per shipment Product sustaining $ 900 per product Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year 200 2,000 Direct labor-hours 1,150 50 Machine-hours 2,400 40 Machine setups 11 3 Production orders 11 3 Shipments 22 3 Product sustaining 3 3 Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?
Exercise 7-15 (Static) Comprehensive Activity-Based Costing Exercise [LO7-2, LO7-3, LO7-4, LO7-5] Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead CostsWages and salaries$ 300,000Other overhead costs100,000Total overhead costs$ 400,000 Activity Cost PoolActivity MeasureTotal Activity for the YearSupporting direct laborNumber of direct labor-hours20,000DLHs Order processingNumber of customer orders400orders Customer supportNumber of customers200customers OtherThis is an organization- sustaining activityNot applicable Distribution of Resource Consumption Across Activities Supporting Direct LaborOrder ProcessingCustomer SupportOtherTotal Wages and salaries40%30%20%10%100% Other overhead costs30%10%20%40%100% During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order follow: Data Concerning the…
Exercise 6-9 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2, LO6-3] Walsh Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations: Variable costs per unit: Manufacturing: Direct materials $ 25 Direct labor $ 13 Variable manufacturing overhead $ 3 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 320,000 Fixed selling and administrative expenses $ 90,000 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company’s product is $56 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption…
T3-7 Variable costing versus absorption costing (LO 1, 2) The following data were prepared by the Waco Wagon Company. Total Variable Fixed Sales price $20/unit Direct materials used $ 90,000 Direct labor $ 99,000 Manufacturing overhead $ 90,000 $ 9,000 $81,000 Selling and administrative expense $ 23,000 $14,000 $ 9,000 Units manufactured 18,000 units Beginning Finished Goods Inventory 20,000 units Ending Finished Goods Inventory 24,000 units Required a.Under absorption costing, what is the unit product cost? b.Under variable costing, what is the unit product cost? c.Under absorption costing, what is the cost of goods sold? d.Under variable costing, what is the cost of goods sold? e.Under absorption costing, what is the operating income? f.Under variable costing, what is the operating income? g.Reconcile the difference in operating income under absorption costing versus variable costing.
Exercise 8-3. JOINT COST ALLOCATION - HYPOTHETICAL MARKET VALUE METHOD JC Company manufactures three different products from a single raw material. A summary of production costs shows: Product Product Product Total B A Y Output in kgs 80,000 200,000 160,000 440,000 Selling price/ kg P0.75 P1.00 P1.50 Costs: Product Product Product Total B A Y Cost Materials -0- -0- -0- P90,000 Direct Labor…
Required information The Foundational 15 (Algo) [LO6-1, LO6-2, LO6-3, LO6-4, LO6-5] Skip to question [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $78 per unit in two geographic regions—the East and West regions. The following information pertains to the company’s first year of operations in which it produced 60,000 units and sold 57,000 units. Variable costs per unit: Manufacturing: Direct materials $ 28 Direct labor $ 12 Variable manufacturing overhead $ 2 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 1,260,000 Fixed selling and administrative expense $ 654,000 The company sold 42,000 units in the East region and 15,000 units in the West region. It determined that $340,000 of its fixed selling and administrative expense is traceable to the West region, $290,000 is traceable to the East region, and the…
Required information The Foundational 15 (Algo) [LO6-1, LO6-2, LO6-3, LO6-4, LO6-5] Skip to question [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $78 per unit in two geographic regions—the East and West regions. The following information pertains to the company’s first year of operations in which it produced 60,000 units and sold 57,000 units. Variable costs per unit: Manufacturing: Direct materials $ 28 Direct labor $ 12 Variable manufacturing overhead $ 2 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 1,260,000 Fixed selling and administrative expense $ 654,000 The company sold 42,000 units in the East region and 15,000 units in the West region. It determined that $340,000 of its fixed selling and administrative expense is traceable to the West region, $290,000 is traceable to the East region, and the…
P6-4A High-Low and Cost Formula Harrison Company has accumulated the following total manufacturing overhead costs for two levels of activity (within the relevant range): Low High Activity (direct labor hours) 90,000 130,000 Total manufacturing overhead $484,000 $628,000 The total overhead cost includes variable, fixed, and mixed costs. At 130,000 direct labor hours, the total cost breakdown is as follows: Variable cost $286,000 Fixed cost 85,000 Semi-mixed cost $257,000 Required a. Using the high-low method of cost analysis, determine the variable portion of the semi-variable cost per direct labor hour. Determine the total fixed cost…
P8-2A Special Order Total cost data follow for Glendale Manufacturing Company, which as a normal capacity per period of 8,000 units of product that sell for $60 each. For the foreseable future, regular sales volume should continue to equal normal capacity. Direct materials $ 100,800 Direct labor 62,400 Variable manufacturing overhead 46,800 Fixed manufacturing overhead (Note 1) 38,400 Selling expense (Note 2) 35,200 Administrative expense (fixed) 15,000 $ 298,600 Notes: 1. Beyond capacity, fixed overhead costs increase $1,800 for each 500 units or fraction thereof until a maximum capacity of 10,000 units is reached. 2. Selling expenses consist of a 6%…
MC Qu. 8-38 Riverton Corp., which began business... Riverton Corp., which began business at the start of the current year, had the following data:Planned and actual production: 40,000 unitsSales: 37,000 units at $15 per unitProduction costs:Variable: $4 per unitFixed: $260,000Selling and administrative costs:Variable: $1 per unitFixed: $32,000The gross margin that the company would disclose on an absorption-costing income statement is: Multiple Choice $97,500. $147,000. $166,500. $370,000. None of the answers is correct. I got 407,000 as an answer but worried that's not correct
Table 2Activity Cost Pool Total Cost Total ActivityAssembly $ 1,114,920 57,000 machine-hoursProcessing orders $ 47,016 1,800 ordersInspection $ 107,328 1,560 inspection-hours Use Table 2 to answer this question. XYZ Corporation has provided the following data from its activity-based costing system (Table 2). The company makes 430 units of product ABA a year, requiring a total of 1,120 machine-hours, 35 orders, and 40 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $130 per unit. According to the activity-based costing system, the product margin for product ABA is: Select one: a. $4,290.10. b. $3,815.50. c. none of the given answer. d. $4,159.50. e. $3,602.10.