Identify a cost driver that may be used to assign each cost pool to each line of snowmobiles.Budgeted CostsCost DriverMachine setup, indirect materialsInspectionsTestsInsurance, plantEngineering designDepreciation, machineryMachine setup, indirect laborProperty taxesOil, heatingElectricity, plant lightingEngineering prototypesDepreciation, plantElectricity, machineryMachine maintenance wages

1). Machine setup, indirect materials - Number of setups.2). Inspections - Number of…

Answered: Identify a cost driver that may be used…

Managerial Accounting

15th Edition

ISBN:9781337912020

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

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

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 1CMA

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Classify the following cost drivers as structural, executional, or operational. a. Number of plants b. Number of moves c. Degree of employee involvement d. Capacity utilization e. Number of product lines f. Number of distribution channels g. Engineering hours h. Direct labor hours i. Scope j. Product configuration k. Quality management approach l. Number of receiving orders m. Number of defective units n. Employee experience o. Types of process technologies p. Number of purchase orders q. Type and efficiency of layout r. Scale s. Number of functional departments t. Number of planning meetings
Classify the following costs of activity inputs as variable, fixed, or mixed. Identify the activity and the associated activity driver that allow you to define the cost behavior. For example, assume that the resource input is cloth in a shirt. The activity would be sewing shirts, the cost behavior variable, and the activity driver units produced. Prepare your answers in the following format: a. Flu vaccine b. Salaries, equipment, and materials used for moving materials in a factory c. Forms used to file insurance claims d. Salaries, forms, and postage associated with purchasing e. Printing and postage for advertising circulars f. Equipment, labor, and parts used to repair and maintain production equipment g. Power to operate sewing machines in a clothing factory h. Wooden cabinets enclosing audio speakers i. Advertising j. Sales commissions k. Fuel for a delivery van l. Depreciation on a warehouse m. Depreciation on a forklift used to move partially completed goods n. X-ray film used in the radiology department of a hospital o. Rental car provided for a client
The actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.
Identifying basis for distribution of service department costs What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments? Building maintenance Inspection and packing Machine repair Human resources Purchasing Shipping Raw materials storeroom
Activity Rates and Determining the cost of a product, which consist of direct materials, direct labor, and factory overhead.Product Costs using Activity-Based Costing Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and A measure of activity that is related to changes in cost. Used in analyzing and classifying cost behavior.activity bases are as follows: Activity BudgetedActivity Cost Activity Base Casting $329,350 Machine hours Assembly 214,600 Direct labor hours Inspecting 41,650 Number of inspections Changing the characteristics of a machine to produce a different product.Setup 38,250 Number of setups Materials handling 37,800 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity…
All applicable Exercises are available with McGraw-Hill’s Connect™Accounting.Cost classifications For each of the following costs, check the column(s) that most likely apply:Cost Variable FixedWages of assembly-line workersDepreciation—plant equipmentGlue and threadShipping costsRaw materials handling costsSalary of public relations managerProduction run setup costsPlant utilitiesElectricity cost of retail storesResearch and development expense
Define value chain and classification of costs for “Utility costs for the plant assembling the Latitude computer line of products.”
Activity Levels and Cost Drivers Shroeder Machine Shop has the following activities: Machine operation Machine setup Production scheduling Materials receiving Research and development Machine maintenance Product design Parts administration Final inspection of a sample of products Materials handling Required Classify each of the activities as a unit-level, batch-level, product-level, or facility-level activity. Identify a potential cost driver for each activity in requirement 1.
Lifecycle Costs (LCC) estimates for design, test, production, operations for manufacturing an electric bus Clarify cost responsibilities of the controller, management, and teams for manufacturing an electric bus
Classify the following costs of activity inputs as variable, fixed, or mixed. Identify the activity andthe associated activity driver that allow you to define the cost behavior. For example, assume thatthe resource input is “cloth in a shirt.” The activity would be “sewing shirts,” the cost behavior“variable,” and the activity driver “units produced.” Prepare your answers in the following format: Activity Cost Behavior Activity DriverSewing shirts Variable Units produced a. Flu vaccineb. Salaries, equipment, and materials used for moving materials in a factoryc. Forms used to file insurance claimsd. Salaries, forms, and postage associated with purchasinge. Printing and postage for advertising circularsf. Equipment, labor, and parts used to repair and maintain production equipmentg. Power to operate sewing machines in a clothing factoryh. Wooden cabinets enclosing audio speakers i. Advertisingj. Sales commissionsk. Fuel for a delivery vanl. Depreciation on a warehousem. Depreciation on…
Cost classifications For each of the following costs, check the columns that most likely apply (both variable and fixed might apply for some costs).Product Costs Direct Indirect Period Variable FixedWages of assembly-line workersDepreciation of plant equipmentGlue and threadOutbound shipping costsRaw materials handling costsSalary of public relations managerProduction run setup costsPlant utilitiesElectricity cost of retail storesResearch and developmentexpense
Which of the following cost and cost allocation base have a stronger cause and effect relationship? A) administration costs and cubic feet B) setup costs and square feet C) quality control costs and the number of inspections D) machine maintenance and setup hours

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