bartleby

Terry 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. Activity Pools Repair and maintenance on assembly machine Cost Pool Total Cost Driver Number of units produced 121,800 Number of programming Programming cost 94,240 hours Number of inspections Number of tests Software inspections Product testing 7,560 11,780 $235,380 Total overhead cost Expected activity for each product follows. Number of Number Number Programming of Units of Number Inspections of Tests Hours Decoder 21,000 2,300 182 1,300 P Decoder 1,500 37,000 98 1,800 Q Total 58,000 3,800 280 3,100 Required: a. Compute the overhead rate for each activity pool. (Round your answers to 2 decimal places.) Allocation Rate Activity Pools Decoder P Decoder Q Repair and maintenance on assembly machine Programming cost Software inspections Product testing b. Determine the overhead cost allocated to each product. (Round intermed iate calculations to 2 decimal places.) Total Allocated Cost Decoder P Decoder Q

Question
Terry 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.
Activity Pools
Repair and maintenance on assembly
machine
Cost Pool Total
Cost Driver
Number of units produced
121,800
Number of programming
Programming cost
94,240
hours
Number of inspections
Number of tests
Software inspections
Product testing
7,560
11,780
$235,380
Total overhead cost
Expected activity for each product follows.
Number of
Number
Number Programming
of Units
of
Number
Inspections of Tests
Hours
Decoder
21,000
2,300
182
1,300
P
Decoder
1,500
37,000
98
1,800
Q
Total
58,000
3,800
280
3,100
Required:
a. Compute the overhead rate for each activity pool. (Round your answers to 2 decimal
places.)
Allocation Rate
Activity Pools
Decoder P
Decoder Q
Repair and maintenance on assembly
machine
Programming cost
Software inspections
Product testing
b. Determine the overhead cost allocated to each product. (Round intermed iate
calculations to 2 decimal places.)
Total Allocated Cost
Decoder P
Decoder Q
expand button
Transcribed Image Text:Terry 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. Activity Pools Repair and maintenance on assembly machine Cost Pool Total Cost Driver Number of units produced 121,800 Number of programming Programming cost 94,240 hours Number of inspections Number of tests Software inspections Product testing 7,560 11,780 $235,380 Total overhead cost Expected activity for each product follows. Number of Number Number Programming of Units of Number Inspections of Tests Hours Decoder 21,000 2,300 182 1,300 P Decoder 1,500 37,000 98 1,800 Q Total 58,000 3,800 280 3,100 Required: a. Compute the overhead rate for each activity pool. (Round your answers to 2 decimal places.) Allocation Rate Activity Pools Decoder P Decoder Q Repair and maintenance on assembly machine Programming cost Software inspections Product testing b. Determine the overhead cost allocated to each product. (Round intermed iate calculations to 2 decimal places.) Total Allocated Cost Decoder P Decoder Q
Expert Solution

Want to see the full answer?

Check out a sample Q&A here
Blurred answer
Students who’ve seen this question also like:
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
Not helpful? See similar books
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Financial Statements And Business Decisions. 1Q
marketing sidebar icon
Want to see this answer and more?
Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*
*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Sampson Jewelry Corporation manufactures custom jewelry. In the past, Sampson has been using a…

A: Answer) Calculation of price quoted for Job No. 309 using Activity Based Costing   Amount…

Q: Sampson Jewelry Corporation manufactures custom jewelry. In the past, Sampson has been using a…

A: A) Calculation of the activity rate and compute is the expected cost of job#309 under the…

Q: XYZ company makes 2 products and is now considering adopting an ABC approach to allocating their…

A: Assembly cost per machine hour =  $300,00015,000 +  5,000 = $15 per machine hour Quality control…

Q: Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead…

A: Inspection cost represents the cost involved in the inspection of operation of the company.

Q: Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to…

A: Activity cost pools: A list of overhead categories that represents a cost associated with an…

Q: Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead…

A: Total machine hours = machine hours for Titanium + machine hours for Aluminium = 500 + 500 = 1,000…

Q: Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead…

A: Activity based Costing is a method assigning overhead and indirect cost. The cost driver rate which…

Q: Celestial Products, Ic., has decided to introduce a new product, which can be manufactured by either…

A: Fixed overhead    Computer assisted Labor intensive Fixed overhead  $ 3,960,000 $ 2,280,000…

Q: Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead…

A: Total overhead cost = Overhead cost at Assembly + Overhead cost at Inspection Total overhead cost =…

Q: Bristol Fabricators, Ic., produces air purifiers in batches. To manufacture a batch of the…

A: working notes: = ($36,300/16,100)*15,000 - $36,300 =33820-$36,300=2480

Q: For many years, Yotsuya Company has used a manufacturing overhead rate based on direct labor hours.…

A: Activity based costing means where overhead cost is allocated on the basis of some cost driver .…

Q: Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to…

A: Step 1: Calculate the activity rate for each cost pools.

Q: Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a…

A: Part (a) Overhead rate using the traditional (plantwide) approach   Standard Customs Total…

Q: world Pet Supply Corporation manufactures two models of grooming stations, a standard and a deluxe…

A: Overhead expense are the expense which incurred during the year other than direct material or direct…

Q: Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead…

A: Calculate inspection cost per inspection:Inspection cost per inspection = Total inspection cost /…

Q: Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM), and organized as a…

A: A) Calculation of predetermined Overhead rate = Total Cost / Machine Hours   Total Cost = $154,000 +…

Q: Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM), and organized as a…

A: The question is related to Activity Based Costing and Traditional costing system. Under Traditional…

Q: Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM), and organized as a…

A: Note: Since you have posted a question with multiple sub-parts, we will solve first three subparts…

Q: Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a…

A: Direct labor=Standard+Custom=$50,000+$100,000=$150,000

Q: Joker Ltd manufactures two products, Normal and Plus. It has recently implemented an activity-based…

A: Click to see the answer

Q: Management was very concerned that their traditional method of costing may no longer be appropriate…

A: The manufacturing cost may be determined using traditional costing or activity-based costing.

Q: Management was very concerned that their traditional method of costing may no longer be appropriate…

A: Cost Report is statement showing all expenditure incurred for conversion of raw material into…

Q: Management was very concerned that their traditional method of costing may no longer be appropriate…

A: Activity based costing with the help of cost drivers, allocates overheads to cost pools before…

Q: Management was very concerned that their traditional method of costing may no longer be appropriate…

A: Under activity based costing, costs of activities assigned to various products on the basis of…

Q: Management was very concerned that their traditional method of costing may no longer be appropriate…

A: Part (a) Statement for Computation of Manufacturing Cost per unit using Traditional Approach…

Q: Hackers Corp. accumulated the following information for its two products, A and B. Product A Total…

A: The traditional system will allocate set up costs on the basis of direct labor hours and ABC will…

Q: Mariah Enterprises makes a variety of consumer electronic products. Its camera manufacturing plant…

A: Labour productivity is the efficiency of labour it divides output with the labour inputs.…

Q: Both plantwide and departmental rates rely on unit-level drivers to assign overhead to products.…

A: Click to see the answer

Q: Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead…

A: Activity based costing (ABC) assigns manufacturing overhead costs to products in a more logical…

Q: The ABC Company manufactures two products, Product Alpha and Product Beta. Both are produced in a…

A: We have the following information: Direct labor hours/unitAlpha: 5Beta: 5 Annual output…

Q: Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a…

A: Click to see the answer

Q: Olive Company makes dessert pies for national convenient food chains. Olive Company is considering…

A: Solution:- Calculation of cost drivers as follows under:- Activities Estimated Overhead Costs…

Q: North Street Corporation manufactures two models of motorized go - carts, a standard and a deluxe…

A: Overhead allocation is a method of allocating indirect expenses. it can be allocated using the…

Q: Foster Florist specializes in large floral bouquets for hotels and other commercial spaces. The…

A: Amount % Allocatedto Bouquets AllocatedOverhead Cost Wages & Salaries 70,000   70%   $49,000…

Q: XYZ Co. manufactures three types of remote-control devices: X, Y, and Z. The company, which use:…

A: Number of parts of Product X =Units to be produced of Product X × Number of parts per unit of…

Q: Stacks manufactures two different models of hockey sticks: the Standard and the Slap Shot. The total…

A: In this question, we are given two models and we have been asked to calculate the predetermined…

Q: Panamint Systems Corporation is estimating activity costs associated with producing disk drives,…

A: Activity-based costing (ABC) refers to the costing method which assigns overhead and indirect costs…

Q: XYZ Co. manufactures three types of remote-control devices: X, Y, and Z. The company, which uses…

A: Under activity based costing, the costs are allocated to the activities using various allocation…

Q: a Corp. has used a traditional cost accounting system to apply quality control costs uniformly to…

A: Traditional costing is the practice of allocating factory overhead to products depending on the…

Q: HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe.…

A: Important Note: As Per bartleby policy if there are multiple sub parts then we are allowed to do…

Q: Mozaic Inc. has decided to introduce a new product, which can be manufactured by either a…

A: Determining the Sales volumes of the firm with both manufacturing methods:- Let X be the sale volume…

Q: Gould Corporation uses the following activity rates from its activity-based costing to assign…

A: Overhead cost assigned = Actual quantity used*Activity rate

Q: Bluefield Corp. has two product lines, A and B. Bluefield has identified the following information…

A: Lets understand the basics. Overheads are the indirect cost which are not directly allocable to any…

Q: Flamingos, Inc. has two service departments and two operating (production) departments.…

A: Allocation of service department cost is the process where the total cost of the service department…

Q: A company has decided to use ABC absorption costing for its overheads. It has worked out that there…

A: Activity-based costing (ABC costing) is a method in which the manufacturing overhead cost is…

Q: mpany has established standard costs for the cabinet department in which one size of a single…

A: Direct materials varianceDirect material variance is a measure that determines the difference…

Q: Calverton, Inc. produces two different products (Standard and Luxury) using two different…

A: Formula: Proportion of inspection activity used = Proportion cost used / Total proportion cost…

Q: Southwest Components recently switched to activity-based costing from the department allocation…

A: T Account It is a visual representations of individual accounts showing business transactions of an…

Q: Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two…

A: Answer -  Working note : Activity Cost Pool Estimated Overhead Cost (A) Estimated Activity…

Q: efferson, Inc. produces two different products (Product 5 and Product Z) using two different…

A: Answer is 34%

Knowledge Booster
Recommended textbooks for you
  • FINANCIAL ACCOUNTING
    Accounting
    ISBN:9781259964947
    Author:Libby
    Publisher:MCG
    Accounting
    Accounting
    ISBN:9781337272094
    Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
    Publisher:Cengage Learning,
    Accounting Information Systems
    Accounting
    ISBN:9781337619202
    Author:Hall, James A.
    Publisher:Cengage Learning,
  • Horngren's Cost Accounting: A Managerial Emphasis...
    Accounting
    ISBN:9780134475585
    Author:Srikant M. Datar, Madhav V. Rajan
    Publisher:PEARSON
    Intermediate Accounting
    Accounting
    ISBN:9781259722660
    Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
    Publisher:McGraw-Hill Education
    Financial and Managerial Accounting
    Accounting
    ISBN:9781259726705
    Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
    Publisher:McGraw-Hill Education
  • FINANCIAL ACCOUNTING
    Accounting
    ISBN:9781259964947
    Author:Libby
    Publisher:MCG
    Accounting
    Accounting
    ISBN:9781337272094
    Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
    Publisher:Cengage Learning,
    Accounting Information Systems
    Accounting
    ISBN:9781337619202
    Author:Hall, James A.
    Publisher:Cengage Learning,
    Horngren's Cost Accounting: A Managerial Emphasis...
    Accounting
    ISBN:9780134475585
    Author:Srikant M. Datar, Madhav V. Rajan
    Publisher:PEARSON
    Intermediate Accounting
    Accounting
    ISBN:9781259722660
    Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
    Publisher:McGraw-Hill Education
    Financial and Managerial Accounting
    Accounting
    ISBN:9781259726705
    Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
    Publisher:McGraw-Hill Education