Managerial Accounting
16th Edition
ISBN: 9781259995484
Author: Ray Garrison
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 1, Problem 2E
EXERCISE 1-2 Classifying
The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company.
Required:
For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing
- The cost of a hard drive installed in a computer.
- The cost of advertising in the Puget Sound Computer Usernewspaper.
- The wages of employees who assemble computers from components.
- Sales commissions paid to the company’s salespeople.
- The salary of the assembly shop’s supervisor.
- The salary of the company’s accountant.
Depreciation on equipment used to test assembled computers before release to customers.- Rent on the facility' in the industrial park.
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Question No.4
Feri Corporation makes a single product. A fire resistant commercial filling cabinet that it sells to office furniture distributors. The company has simple ABC system that it use for internal decision making. The company has two overheads departments whose costs are listed below;
Manufacturing Over head $ 500,000
Selling & Admin overhead $ 300,000
Total overhead Costs $ 800,000
The company ABC’s system has the following activity cost pools and activity measures;
Activity Costs Pool Activity Measures
Assembling Units……………………… Number of Units
Processing Order ……………………… Number of Orders…
Appendix 4B) Assigning Support Department Costs by Using the Direct Method
Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of maintenance hours. The following data pertain to Quillen:
Support Departments
Producing Departments
S1
S2
Cutting
Sewing
Direct costs
$180,000
$150,000
$122,000
$90,500
Normal activity:
Number of employees
—
30
63
147
Maintenance hours
1,200
—
16,000
4,000
Required:
1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratios—one for Cutting and the other for Sewing.) Enter your answers as decimal values.
S1
S2
Cutting
Sewing
2. Allocate the support department costs to the producing departments by using the direct method. Use a…
(Appendix 4B) Sequential Method
Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of maintenance hours. The following data pertain to Quillen:
Support Departments
Producing Departments
S1
S2
Cutting
Sewing
Direct costs
$180,000
$150,000
$122,000
$90,500
Normal activity:
Number of employees
—
30
63
147
Maintenance hours
1,200
—
16,000
4,000
Assume that Quillen uses the sequential method to allocate support department costs. S1 is allocated first, then S2.
Required:
1. Calculate the cost assignment ratios to be used under the sequential method for S2, Cutting, and Sewing. Enter your answers as decimal values, carried out to four decimal places, if necessary.
Allocation ratios for S1:
S2
fill in the blank 1
Cutting
fill in the blank 2
Sewing
fill in the blank 3…
Chapter 1 Solutions
Managerial Accounting
Ch. 1.A - EXERCISE 1A1 Cost of Quality Terms LO17, LO18 A...Ch. 1.A - EXERCISE 1A2 Classification of Quality Costs LO17...Ch. 1.A - Prob. 3PCh. 1.A - PROBLEM 1A4 Quality Cost Report LO17, LO18 page 66...Ch. 1 - Prob. 1QCh. 1 - Define the following: (a) direct materials, (b)...Ch. 1 - Explain the difference between a product cost and...Ch. 1 - Distinguish between (a) a variable cost, (b) a...Ch. 1 - Prob. 5QCh. 1 - Define the following terms: (a) cost behavior and...
Ch. 1 - What is meant by an activity base when dealing...Ch. 1 - Managers often assume a strictly linear...Ch. 1 - Distinguish between discretionary fixed costs and...Ch. 1 - Does the concept of the relevant range apply to...Ch. 1 - What is the difference between a traditional...Ch. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 1AECh. 1 - Prob. 2AECh. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L012, L013, L014, L015, L016 Martinez Company’s...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6
Martinez...Ch. 1 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 1 - EXERCISE 1—1 Identifying Direct and Indirect Costs...Ch. 1 - EXERCISE 1-2 Classifying Manufacturing Costs LO1-2...Ch. 1 - EXERCISE 1-3 Classifying Costs as Product or...Ch. 1 - EXERCISE 14 Fixed and Variable Cost Behavior LO14...Ch. 1 - Prob. 5ECh. 1 - EXERCISE 1—6 Traditional and Contribution Format...Ch. 1 - Prob. 7ECh. 1 - EXERCISE 18 Product Costs and Period Costs;...Ch. 1 - Prob. 9ECh. 1 - Prob. 10ECh. 1 - EXERCISE 1—11 Cost Behavior; Contribution Format...Ch. 1 - EXERCISE 1-12 Product and Period Cost Flows LO1–3...Ch. 1 - Prob. 13ECh. 1 - EXERCISE 1-14 Cost Classification 1O1–2, LO1–3,...Ch. 1 - Prob. 15ECh. 1 - EXERCISE 1–16 Cost Classifications for Decision...Ch. 1 - EXERCISE 1-17 Classifying Variable and Fixed Costs...Ch. 1 - PROBLEM 1-18 Direct and Indirect Costs; variable...Ch. 1 - PROBLEM 1-19 Traditional and Contribution Format...Ch. 1 - PROBLEM 120 Variable and Fixed Costs; Subtleties...Ch. 1 - Prob. 21PCh. 1 - Prob. 22PCh. 1 - PROBLEM 123 Cost Classification LO11, LO13, LO14...Ch. 1 - PROBLEM 1-24 Different Cost Classifications for...Ch. 1 - Prob. 25PCh. 1 - CASE 1-26 Cost Classification and Cost Behavior...Ch. 1 - Prob. 27C
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