Can I get the answers to 4-5. Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The companyconsiders all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based ondirect labor-hours. Koontz's controller prepared the segmented income statement that is shown below for the most recent year (heallocated selling and administrative expenses to products based on sales dollars):BasicAdvancedTotalNumber of units produced and sold20,00010,00030,000$3,000,0002,300,000$ 5,000,0003,650,0001,350,000Sales$2,000,0001,350,000Cost of goods soldGross marginSelling and administrative expenses700,000720,000650,000480,0001,200,000Net operating income (loss)$ (20,000)$170,000150,000Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $60 per unit for the Advanced model.Koontz is considering a change from plantwide overhead allocation to a departmental approach. The overhead costs in the company'sMolding Department would be allocated based on machine-hours and the overhead costs in its Assemble and Pack Department wouldbe allocated based on direct labor-hours. To enable further analysis, the controller gathered the following information:AssembleMolding$ 787,500and PackTotalManufacturing overhead costsDirect labor hours:$ 562,500$ 1,350,00010,0005,000Basic20,00010,00030,00015,000AdvancedMachine hours:Basic12,00010,00012,00010,000Advanced 3. Koontz's production manager has suggested using activity-based costing instead of either the plantwide or departmentalapproaches. To facilitate the necessary calculations, she assigned the company's total manufacturing overhead cost to five activitycost pools as follows:ManufacturingActivity MeasureMachine-hours in MoldingActivity Cost PoolMachiningAssemble and packOrder processingSetupsOther (unused capacity)Overhead$417,500282,500Direct labor-hours in Assemble and PackNumber of customer orders230,000340,00080,000Setup hours$1,350,000She also determined that the average order size for the Basic and Advanced models is 400 units and 50 units, respectively. Themolding machines require a setup for each order. One setup hour is required for each customer order of the Basic model and threehours are required to setup for an order of the Advanced model.The company pays a sales commissions of 5% for the Basic model and 10% for the Advanced model. Its traceable fixed advertisingcosts include $150,000 for the Basic model and $200,000 for the Advanced model. The remainder of the company's selling andadministrative costs are organization-sustaining in nature.Using the additional information provided by the production manager, calculate:a. An activity rate for each activity cost pool.b. The total manufacturing overhead cost allocated to the Basic model and the Advanced model using the activity-based approach.c. The total selling and administrative cost traced to the Basic model and the Advanced model using the activity-based approach.4. Using your activity-based cost assignments from requirement 3, prepare a contribution format segmented income statement that isadapted from Exhibit 6-8. (Hint: Organize all of the company's costs into three categories: variable expenses, traceable fixed expenses,and common fixed expenses.)5. Using your contribution format segmented income statement from requirement 4, calculate the break-even point in dollar sales forthe Advanced model.

The question is based on the concept of Cost Accounting.

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 it 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 $ 5,000,000 3,650,000 1,350,000 1,200,000 $3,000,000 $2,000,000 1,350,000 Sales Cost of goods sold Gross margin Selling and administrative expenses 2,300,000 700,000 650,000 720,000 480,000 Net operating income (loss) $ (20,000) $ 170,000 $ 150,000

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 it 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 $ 5,000,000 3,650,000 1,350,000 1,200,000 $3,000,000 $2,000,000 1,350,000 Sales Cost of goods sold Gross margin Selling and administrative expenses 2,300,000 700,000 650,000 720,000 480,000 Net operating income (loss) $ (20,000) $ 170,000 $ 150,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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Kenkel, Ltd. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 80,000. b. Requisitioned raw materials to production, 80,000. c. Distributed direct labor costs, 10,000. d. Factory overhead costs incurred, 60,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 225,000, on account.
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Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)
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Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data were compiled by the accountants before making any allocations: The total cost of purchasing and receiving parts used in manufacturing is 60,000. The company uses a job-costing system with a single indirect cost rate. Under this system, allocated costs were 48,000 and 12,000 for X and Y, respectively. If an activity-based system is used, what would be the allocated costs for each product?
Lansing. Inc., provided the following data for its two producing departments: Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B. Required: 1. Calculate the overhead rates for each department. 2. Using departmental rates, assign overhead to live two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours? 3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?
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The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
Medical Tape makes two products: Generic and Label. It estimates it will produce 423,694 units of Generic and 652,200 of Label, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: How much is the overhead allocated to each unit of Generic and Label?
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For E2-17, prepare any journal entries that would have been different if the only trigger points had been the purchase of materials and the sale of finished goods. Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)