Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 10, Problem 57P
Activity-Based Reporting: Service Organization
Allcott Computer Services (ACS) provides computer training and repair services for schools and local businesses. Sales for year 1 totaled $1,350,000. Information regarding resources for the year includes the following:
In addition. ACS spent $42,000 on 500 repair verifications with a cost driver rate of $75. Required
Management has requested that you do the following:
- a. Prepare a traditional income statement.
- b. Prepare an activity-based income statement.
- c. Write a short report to management explaining why the activity-based income statement provides useful information to managers. Use the information from requirements (a) and (b) to develop examples for your report.
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Nation’s Capital Fitness, Inc. operates a chain of fitness centers in the Washington, D.C., area. The firm’s controller is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the firm’s equipment maintenance costs must be determined. The accounting staff has suggested the use of an equation, in the form of Y = a + bX, for maintenance costs. Data regarding the maintenance hours and costs for last year are as follows: (image below)
Required:1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation’s Capital Fitness, Inc. Express the cost behavior pattern in equation form.2. Using your answer to requirement (1), what is the variable component of the maintenance cost?3. Compute the predicted maintenance cost at 590 hours of activity.4. Compute the variable cost per hour and the fixed cost per hour at 600 hours of activity. Explain why the fixed cost per hour could be…
B-You is a consulting firm that works with managers to improve their interpersonal skills. Recently, a representative of a high-tech research firm approached B-You's owner with an offer to contract for one year with B-You to improve the interpersonal skills of a newly hired manager. B-You reported the following costs and revenues during the past year.
B-YOU
Annual Income Statement
Sales revenue
$
234,300
Costs
Labor
111,000
Equipment lease
16,000
Rent
13,500
Supplies
10,300
Officers' salaries
70,000
Other costs
7,000
Total costs
$
227,800
Operating profit (loss)
$
6,500
If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $84,000. Equipment lease will increase by 5 percent. Supplies will increase by an estimated 10 percent and other costs by 15 percent. The existing building has space for the new consultant. No new offices will be necessary for this work.
Problem 1-44 (Algo) Part a…
Chapter 10 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 10 - How are activity-based costing and activity-based...Ch. 10 - Can activity-based management be implemented...Ch. 10 - Prob. 3RQCh. 10 - What are some ways in which customers affect a...Ch. 10 - How is computing the cost of customers the same as...Ch. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Under what conditions should the cost of excess...Ch. 10 - In what ways does quality affect cost?Ch. 10 - What are the four categories in a cost of quality...
Ch. 10 - Prob. 11CADQCh. 10 - Prob. 12CADQCh. 10 - Consider a library that spends 25,000 to move most...Ch. 10 - Prob. 14CADQCh. 10 - Prob. 15CADQCh. 10 - You can get the cost of customers by first...Ch. 10 - Prob. 17CADQCh. 10 - Prob. 18CADQCh. 10 - Prob. 19CADQCh. 10 - Prob. 20CADQCh. 10 - Many if not most schools in the United States have...Ch. 10 - Prob. 22CADQCh. 10 - Prob. 23CADQCh. 10 - Prob. 25ECh. 10 - Prob. 26ECh. 10 - Prob. 27ECh. 10 - Cost Hierarchy for a Not-for-Profit Below are...Ch. 10 - Prob. 29ECh. 10 - Driver Identification Below are various activities...Ch. 10 - Activity-Based Costing of Customers Marvins...Ch. 10 - Activity-Based Costing of Customers Rock Solid...Ch. 10 - Prob. 33ECh. 10 - Prob. 34ECh. 10 - Prob. 35ECh. 10 - Activity-Based Costing of Suppliers Hult Games...Ch. 10 - Prob. 37ECh. 10 - Activity-Based Costing of Suppliers Kinnear...Ch. 10 - Prob. 39ECh. 10 - Resources Used versus Resources Supplied Tri-State...Ch. 10 - Prob. 41ECh. 10 - Resources Used versus Resources Supplied Conlon...Ch. 10 - Prob. 43ECh. 10 - Prob. 44ECh. 10 - Prob. 45ECh. 10 - Prob. 46ECh. 10 - Assigning Cost of Capacity Mimis Fixtures...Ch. 10 - Assigning Cost of Capacity Curts Casting...Ch. 10 - Prob. 49ECh. 10 - Costs of Quality The following represents the...Ch. 10 - Prob. 51ECh. 10 - Costs of Quality Nuke-It-Now manufactures...Ch. 10 - Prob. 53ECh. 10 - Cost of Quality: Environmental Issues Many...Ch. 10 - Prob. 55ECh. 10 - Prob. 56PCh. 10 - Activity-Based Reporting: Service Organization...Ch. 10 - Prob. 58PCh. 10 - Customer Profitability Carmel Company has a...Ch. 10 - Activity-Based Costing of Suppliers JFI Foods...Ch. 10 - Prob. 61PCh. 10 - Prob. 62PCh. 10 - Prob. 63PCh. 10 - Activity-Based Reporting: Manufacturing...Ch. 10 - Assigning Capacity Costs Cathy and Toms Specialty...Ch. 10 - Prob. 66PCh. 10 - Prob. 67PCh. 10 - Assigning Capacity Costs Mercia Chocolates...Ch. 10 - Prob. 69PCh. 10 - Prob. 70PCh. 10 - Prob. 71P
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