PICO Ltd is a manufacturer of picnic tables of varying sizes. It is considering switching to the ABC system. As its management accountant, identify two (2) potential activity-based costing pools for PICO Ltd and their appropriate cost drivers?
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PICO Ltd is a manufacturer of picnic tables of varying sizes. It is considering switching to the ABC system. As its
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- Electan Company produces two types of printers. The company uses ABC, and all activity drivers are duration drivers. Electan Company is considering using DBC and has gathered the following data to help with its decision. A. Activities with duration drivers: B. Activities with consumption ratios and costs: C. Products with cycle time and practical capacity: Required: 1. Using cycle time and practical capacity for each product, calculate the total time for all primary activities. Comment on the relationship to ABC. 2. Calculate the overhead rate that DBC uses to assign costs. Comment on the relationship to a unit-based plantwide overhead rate. 3. Use the overhead rate calculated in Requirement 2 to calculate (a) the overhead cost per unit for each product, and (b) the total overhead assigned to each product. How does this compare to the ABC assignments shown in Part B of the Information set? 4. What if the units actually produced were 10,000 for Printer A and 18,000 for Printer B. Using DBC, calculate the cost of unused capacity.Abernathy, Inc., produces two different generators and is concerned about their quality. The company has identified the following quality activities and costs associated with the two products: Required: 1. Calculate the quality cost per unit for each product, and break this unit cost into quality cost categories. Which of the two seems to have the lowest quality? 2. How might a manager use the unit quality cost information?Trail Outfitters has this information for its manufacturing: Its income statement under absorption costing is as follows: Prepare an income statement with variable costing and a reconciliation statement between both methods.
- Happy Trails has this information for its manufacturing: Â Its income statement under absorption costing is: Prepare an income statement with variable costing and a reconciliation statement between both methods.The management of Wheeler Company has decided to develop cost formulas for its major overhead activities. Wheeler uses a highly automated manufacturing process, and power costs are a significant manufacturing cost. Cost analysts have decided that power costs are mixed; thus, they must be broken into their fixed and variable elements so that the cost behavior of the power usage activity can be properly described. Machine hours have been selected as the activity driver for power costs. The following data for the past eight quarters have been collected: Required: 1. Prepare a scattergraph by plotting power costs against machine hours. Does the scatter-graph show a linear relationship between machine hours and power cost? 2. Using the high and low points, compute a power cost formula. 3. Use the method of least squares to compute a power cost formula. Evaluate the coefficient of determination. 4. Rerun the regression and drop the point (20,000; 26,000) as an outlier. Compare the results from this regression to those for the regression in Requirement 3. Which is better?bonita, inc. decided to implement the activity-based costing approah and was quite successful in its use. However, the controller is wondering if instead of only two activity cost pools, they should expand to three activity cost pools based on the following:
- Pinnacle Inc. has decided to switch from a traditional overhead allocation system to an ABC system. So far, the firm’s managers have decided that Pinnacle needs six different activity cost pools, including one for assembling products. When selecting a driver for this cost pool, Pinnacle’s managers should be sure to select\\nSelect answer from the options below\\nthe product that has the highest per-unit assembly cost.\\nthe activity that appears to play the greatest role in determining the firm’s product assembly costs.\\nthe activity that appears to play the greatest role in determining how many units the firm assembles in a given period.\\nthe product that appears to account for the majority of the costs in the product assembly pool.Pinnacle Inc. has decided to switch from a traditional overhead allocation system to an ABC system. So far, the firm’s managers have decided that Pinnacle needs six different activity cost pools, including one for assembling products. When selecting a driver for this cost pool, Pinnacle’s managers should be sure to select _______ A. the activity that appears to play the greatest role in determining the firm’s product assembly costs. B. the activity that appears to play the greatest role in determining how many units the firm assembles in a given period. C. the product that appears to account for the majority of the costs in the product assembly pool. D. the product that has the highest per-unit assembly cost.Plain Limited produces two standard products, White and Grey. You have recently been appointed as a management accountant along with a new marketing manager, who has several ideas about how to grow the company, including introducing new products with different designs. The company currently absorbs overheads on the basis of units produced, but they have read about a method based on activities undertaken, Activity Based Costing. They have asked you to help them to investigate this method and it’s implication for their business should they decide to implement it in the next accounting year. The current expected output for the existing products during the next year is White 15,000 and Grey 12,000 The company has also provided the following information about the current overhead costs of the business; Overhead activity. Annual costs Cost driver. Amount of activity White…
- Pinnacle Inc. has decided to switch from a traditional overhead allocation system to an ABC system. So far, the firm’s managers have decided that Pinnacle needs six different activity cost pools, including one for assembling products. When selecting a driver for this cost pool, Pinnacle’s managers should be sure to select -the product that appears to account for the majority of the costs in the product assembly pool. - the product that has the highest per-unit assembly cost. - the activity that appears to play the greatest role in determining the firm’s product assembly costs. - the activity that appears to play the greatest role in determining how many units the firm assembles in a given period.Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs-the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Service Departments User Departments Info Systems Facilities Computer Program Consult Training Total Budgeted Overhead $ 50,000 $ 25,000 $ 75,000 $ 110,000 $ 85,000 $ 345,000 Info Systems (hrs.) 400 1,100 600 900 3,000 Facilities (Square feet) 200,000…Snowden Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because of these product differences, the company wants to use activity-based costing to allocate overhead costs. It has identified four activity pools. Relevant information follows. *Need help for informatio going into excel*
