Support Department Cost Allocation-Direct Method Charlie's Wood Works produces wood products (e.g, cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitorial and Security departments support the Cutting and Assembly departments. The Assembly Department spans about 52,480 square feet and holds assets valued at about $76,760. The Cutting Department spans about 29,520 square feet and holds assets valued at about $125,240. Charlie's Wood Works allocates support department costs using the direct method. If costs from the Janitorial Department are allocated based on square feet and costs from the Security Department are allocated based on asset value. a. Determine the percentage of Janitorial costs that should be allocated to the Assembly Department. % b. Determine the percentage of Security costs that should be allocated to the Cutting Department. %

Support Department Cost Allocation-Direct Method Charlie's Wood Works produces wood products (e.g, cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitorial and Security departments support the Cutting and Assembly departments. The Assembly Department spans about 52,480 square feet and holds assets valued at about $76,760. The Cutting Department spans about 29,520 square feet and holds assets valued at about $125,240. Charlie's Wood Works allocates support department costs using the direct method. If costs from the Janitorial Department are allocated based on square feet and costs from the Security Department are allocated based on asset value. a. Determine the percentage of Janitorial costs that should be allocated to the Assembly Department. % b. Determine the percentage of Security costs that should be allocated to the Cutting Department. %

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...

See similar textbooks

Similar questions

Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases. a. Direct material cost per unit. b. Fees for using a patent of $500,000 plus $0.25 for each unit produced. c. Salary of quality control supervisor. d. Straight-line depreciation per unit on factory equipment. e. Total direct materials cost.
What is the conversion cost to manufacture insulated travel cups if the costs are: direct materials, $17,000; direct labor, $33,000; and manufacturing overhead, $70,000? A. $16,000 B. $50,000 C. $103,000 D. $120000
A firm has 100,000 in direct materials costs, 50,000 in direct labor costs, and 80,000 in overhead. Which of the following is true? a. Prime costs are 150,000; conversion costs are 180,000. b. Prime costs are 130,000; conversion costs are 150,000. c. Prime costs are 150,000; conversion costs are 130,000. d. Prime costs are 180,000; conversion costs are 150,000.
Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.
Crafts 4 All has these costs associated with production of 12,000 units of accessory products: direct materials, $19; direct labor, $30; variable manufacturing overhead, $15; total fixed manufacturing overhead, $450,000. What is the cost per unit under both the variable and absorption methods?
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?
The following cost allocation information is available for Moving Motors Ltd: Production departments Service departments A B Stores Maintenance Total Allocated costs R105 000 R196 500 R37 800 R50 700 R390 000 Service department usage - Stores 50% 40% - 10% - Maintenance 60% 15% 25% - If Moving Motors Ltd uses the simultaneous equation method of allocation, and Production Department A’s overhead recovery rate is R4.15 per machine hour, then the budgeted machine hours for Production Department A are (rounded): a. 43 003 machine hours b. 39 518 machine hours c. 40 000 machine hours d. 39 617 machine hours e. 43 080 machine hours
Company A produces a component used in the production of one of the company’s main products.The costs are budgeted as follows:Amount per unit (R) Amount per 5 000 units (R)Materials 5 25 000Labour 15 75 000Variable overhead 10 50 000Depreciation 4 20 000Allocated general overhead 12 60 000Total cost 46 230 000The components can be purchased from an outside supplier at a cost of R35 per unit.Required:Q.3.2 State five qualitative aspects that the company must evaluate before making a decision in Q.3.1 above.Q.3.3 Briefly explain the difference between avoidable costs, differential costs and opportunity costs. Provide one example of each cost.Q.3.4 List two examples of scenarios where relevant costing can be used effectively in decision‐making.
Company A produces a component used in the production of one of the company’s main products. The costs are budgeted as follows: Amount per unit (R) Amount per 5 000 units (R) Materials 5 25 000Labour 15 75 000Variable overhead 10 50 000Depreciation 4 20 000Allocated general overhead 12 60 000Total cost 46 230 000The components can be purchased from an outside supplier at a cost of R35 per unit. Required: Q.3.1 Determine whether the company should make or buy the component. In arriving at your solution clearly show all your workings, as marks will be allocated. Q.3.2 State five qualitative aspects that the company must evaluate before making a…
Q1. Jassim Compagny is producing only one product. Two types of direct materials are used to produce this product: direct material type A and direct material type B. The estimated data for Jassim Compagny is as following: Sales $90,000 Costs: Direct materials type A $40,000 Hourly employees 15,000 Manager’s salary 10,000 Direct materials type B 5,000 Marketing 10,000 Total Costs 80,000 Budgeted pretax profit $ 10,000 Compute the revenues needed to achieve a target after-tax income of $30,000. The income tax rate is 20%. What is the margin of safety in revenue?
A company produced 500 units of a product and incurred the following costs. Direct materials, P8,000; direct labor, P10,000; overhead (20% fixed), P45,000. Is the sales value of 500 units is P102,000, what is the contribution margin rate? a.) 44% b.) 47% c.) 53% d.)74% Id appreciate if youd utilize full solutions so that I can understand it completely. Thank you
Total Manufacturing Costs ₱325,000 Applied Overhead Costs, 75% of direct labor cost ₱075,000 Selling expenses ₱316,000 Administrative expenses ₱314,000 What is the conversion cost? Show solution Group of answer choices ₱75,000 ₱100,000 ₱131,250 ₱175,000