Sh52 Exercise 5-10A (Algo) Computing product cost with given activity allocation rates LO 5-3Finch Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production processis automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company hasidentified five major activities involved in producing the keyboards.ActivityMaterials receiving & handlingProduction setupAssemblyQuality inspectionPacking and shippingActivity measures for the two kinds of keyboards follow:LaptopsDesktopsLabor Cost$1,3201,210Allocation BaseCost of materialNumber of setupsNumber of partsInspection timeNumber of ordersLaptop keyboardsDesktop keyboardsMaterial Number of Number ofCont$5,8007,300Cost Per UnitSetupa33Parts4427Allocation Rate18 of material cont$102.00 per setup$ 3.00 per part$ 1.90 per minute$ 11.00 per orderInspection Time7,400 minutes4,600 minutesNumber ofOrdereRequireda. Compute the cost per unit of laptop and desktop keyboards, assuming that Finch made 200 units of each type of keyboard.Note: Round your answers to 2 decimal places.6917

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Description: Sh52 Exercise 5-10A (Algo) Computing product cost with given activity allocation rates LO 5-3Finch Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production processis automated, and the company

1. Calculation of cost per unit of laptop keyboards. a) Material receiving & handling =…

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Finch Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production pre is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops beaktope Allocation Bas Cost of material Number of setups Number of parta Inspection time Number of orders Labor Cost $1,320 1,210 Material Number of Number of Coat $5,800 7,300 Betupa 33 14 Allocation Rate 1 of material cont $102.00 per setup $ 3.00 per part $ 1.90 per minute $ 11.00 per order Parts Inspection Time 44 27 7,400 minutes 4,600 minutes Number of Orders 69 17 Required a. Compute the cost per unit of laptop and desktop keyboards, assuming that Finch made 200 units of each type of keyboard. Note: Round your answers to 2 decimal places.

Finch Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production pre is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops beaktope Allocation Bas Cost of material Number of setups Number of parta Inspection time Number of orders Labor Cost $1,320 1,210 Material Number of Number of Coat $5,800 7,300 Betupa 33 14 Allocation Rate 1 of material cont $102.00 per setup $ 3.00 per part $ 1.90 per minute $ 11.00 per order Parts Inspection Time 44 27 7,400 minutes 4,600 minutes Number of Orders 69 17 Required a. Compute the cost per unit of laptop and desktop keyboards, assuming that Finch made 200 units of each type of keyboard. Note: Round your answers to 2 decimal places.

Financial & Managerial Accounting

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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?
Identifying activity bases in an activity-based cost system Select Foods Inc. uses activity-based costing to determine product costs. For each activity listed in the left column, match an appropriate activity base from the right column. You may use items in the activity-base list more than once or not at all. Activity Activity Base Accounting reports Engineering change orders Customer return processing Kilowatt hours used Electric power Number of accounting reports Human resources Number of customers Inventory control Number of customer orders Invoice and collecting Number of customer returns Machine depreciation Number of employees Materials handling Number of inspections Order shipping Number of inventory transactions Payroll Number of machine hours Production control Number of material moves Production setup Number of payroll checks processed Purchasing Number of production orders Quality control Number of purchase orders Sales order processing Number of sales orders Number of setups
(Appendix 3A) Separating Fixed and Variable Costs, Service Setting Louise McDermott, controller for the Galvin plant of Veromar Inc., wanted to determine the cost behavior of moving materials throughout the plant. She accumulated the following data on the number of moves (from 100 to 800 in increments of 100) and the total cost of moving materials at those levels of moves: Required: 1. Prepare a scattergraph based on these data. Use cost for the vertical axis and number of moves for the horizontal axis. Based on an examination of the scattergraph, does there appear to be a linear relationship between the total cost of moving materials and the number of moves? 2. Compute the cost formula for moving materials by using the high-low method. Calculate the predicted cost for a month with 550 moves by using the high-low formula. (Note: Round the answer for the variable rate to three decimal places and the answer for total fixed cost and total cost to the nearest dollar.) 3. CONCEPTUAL CONNECTION Compute the cost formula for moving materials using the method of least squares. (Note: For the method of least squares, round the variable rate to two decimal places and total fixed cost and total cost to the nearest dollar.) Using the regression cost formula, what is the predicted cost for a month with 550 moves? What does the coefficient of determination tell you about the cost formula computed by regression? 4. CONCEPTUAL CONNECTION Evaluate the cost formula using the least squares coefficients. Could it be improved? Try dropping the third data point (300, 3,400), and rerun the regression.
Identifying product cost distortion Peachtree Beverage Company manufactures soft drinks. Information about two products is as follows: It is known that both products have the same direct materials and direct labor costs per Case. Peachtree Beverage allocates factory overhead to products by using a single plant-wide factory overhead rate, based on direct labor cost. Additional information about the two products is as follows: Jamaican Punch: Requires extensive process preparation and sterilization prior to processing. The ingredients are from Jamaica, requiring complex import controls. The formulation is complex, and it is thus difficult to maintain quality. Finally, the product is produced in small production run sizes. King Kola: Requires minor process preparation and sterilization prior to processing. The ingredients are acquired locally. The formulation is simple, and it is easy to maintain quality. Finally, the product Ls produced in large production run sizes. Explain the weakness in the per-case product profitability report in light of the additional data.
INTEGRATION EXERCISE 4 Plantwide and Departmental Overhead Allocation; Activity-Based Costing; Segmented Income Statements LO3–1, LO3–2, LO3–3, LO3–4, LO4–4, LO4–5, LO5–1, LO5–3, LO5–4 Koontz Company manufactures two models of industrial components—a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and page 599it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz’s controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars): Basic Advanced Total Number of units produced and sold 20,000 10,000 30,000 Sales $3,000,000 $2,000,000 $5,000,000 Cost of goods sold 2,300,000 1,350,000 3,650,000 Gross margin 700,000 650,000 1,350,000 Selling and administrative expenses 720,000 480,000…
(Appendix 4B) Assigning Support Department Costs by Using the Direct Method Sanjay Company manufactures a product in a factory that has two producing departments, Assembly and Painting, and two support departments, S1 and S2. The activity driver for S1 is square footage, and the activity driver for S2 is number of machine hours. The following data pertain to Sanjay: Support Departments Producing Departments S1 S2 Assembly Painting Direct costs $200,000 $140,000 $115,000 $96,000 Normal activity: Square footage — 500 1,875 625 Machine hours 337 — 3,200 12,800 Required: 1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratios—one for Assembly and the other for Painting.) Round your answers to two decimal places. Assembly Painting S1 fill in the blank 1 fill in the blank 2 S2 fill in the blank 3 fill in the blank 4 2. Allocate the support department…
Please give me step by step instruction ch 26 pro 8 Product Costs using Activity Rates Cardio Care Inc. manufactures stationary bicycles and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $30 per machine hour Assembly $10 per direct labor hour Setup $47 per setup Inspecting $32 per inspection Production scheduling $11 per production order Purchasing $8 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Stationary Bicycle Treadmill Machine hours 1,729 1,020 Direct labor hours 380 148 Setups 44 14 Inspections 669 401 Production orders 75 15 Purchase orders 172 105 Units produced 298 200 Use the activity…
3 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: 5 ints 00:40:40 Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Activity Cost Pool Purchase orders Rework requests Product testing Machine related Estimated Overhead Cost $ 170,000 374,400 350,000 1,150,000 $2,044,400 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Rate per order per request per test per MH Deluxe 1,000 600 5,000 18,000 Activity Regular 1,500 1,200 12,500 28,000 Total 2,500 1,800 17,500 46,000 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the…
Question 6.4 Krum Lawn Equipment has five departments, of which Casting and Finishing are producing departments. Maintenance, Product Movement, and Inspection are service departments. The distribution of the service departments is as follows: Service Costs Services provided to: Maint. Prod. Move. Insp. Cast. Finish. Maintenance $84,000 5% 25% 50% 20% Product movement 160,000 10% 5 45 40 Inspection 38,000 15 5 20 60 Required Use the direct method to allocate the service departments' costs. Prepare a schedule showing the total costs allocated to each…
Exercise 4-5 (Algo) Cost Reconciliation Report—Weighted-Average Method [LO4-5] Maria Am Corporation uses the weighted-average method in its process costing system. The Baking Department is one of the processing departments in its strudel manufacturing facility. In June in the Baking Department, the cost of beginning work in process inventory was $4,880, the cost of ending work in process inventory was $1,120, and the cost added to production was $25,300. Required: Prepare a cost reconciliation report for the Baking Department for June.
Exercise 6-2 First Stage Allocation [LO6-2] SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system: Driver and guard wages $ 860,000 Vehicle operating expense 290,000 Vehicle depreciation 170,000 Customer representative salaries and expenses 200,000 Office expenses 60,000 Administrative expenses 360,000 Total cost $ 1,940,000 The distribution of resource consumption across the…
Problem 8-63 (Algo) Solving for Unknowns: FIFO Method (LO 8-4, 5) For each of the following independent cases, use FIFO costing to determine the information requested. Required: a) At the start of the period, 3,700 units were in the work-in-process inventory; 3,100 units were in the ending inventory. During the period, 9,600 units were transferred out to the next department. Materials and conversion costs are added evenly throughout the production process. FIFO costing is used. How many units were started during this period?b. Beginning inventory amounted to 1,100 units. This period, 4,600 units were started and completed. At the end of the period, the 3,200 units in inventory were 40 percent complete. Using FIFO costing, the equivalent production for the period was 6,100 units. What was the percentage of completion of the beginning inventory?c. The ending inventory included $81,900 for conversion costs. During the period, 41,300 equivalent units were required to complete the…