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AccountingManagerial Accounting: The Cornerstone of Business Decision-Making7th Edition

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Chapter 13, Problem 44E
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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

Solutions

Chapter
Section
Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 11DQ
Problem 12DQ
Problem 13DQ
Problem 14DQ
Problem 15DQ
Problem 1MCQ
Problem 2MCQ
Problem 3MCQ
Problem 4MCQ
Problem 5MCQ
Problem 6MCQ
Problem 7MCQ
Problem 8MCQ
Problem 9MCQ
Problem 10MCQ
Problem 11MCQ
Problem 12MCQ
Problem 13MCQ
Problem 14MCQ
Problem 15MCQ
Problem 16MCQ
Problem 17MCQ
Problem 18MCQ
Problem 19MCQ
Problem 20BEA
Problem 21BEA
Problem 22BEA
Problem 23BEA
Problem 24BEA
Problem 25BEA
Problem 26BEA
Problem 27BEB
Problem 28BEB
Problem 29BEB
Problem 30BEB
Problem 31BEB
Problem 32BEB
Problem 33BEB
Problem 34E
Problem 35E
Problem 36E
Problem 37E
Problem 38E
Problem 39E
Problem 40E
Problem 41E
Problem 42E
Problem 43E
Problem 44E
Problem 45E
Problem 46E
Problem 47E
Problem 48E
Problem 49E
Problem 50E
Problem 51P
Problem 52P
Problem 53P
Problem 54P
Problem 55P
Problem 56P
Problem 57P
Problem 58P
Problem 59P
Problem 60P
Problem 61P
Problem 62C
Problem 63C
Problem 64C
Problem 65C
BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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A value stream has three activities and two products. The units produced and shipped per week are 50 of the limited model (Model K), characterized by special additional features, and 150 of the regular model (Model R), with only basic features. The conversion cost resource consumption patterns are shown as follows:

Chapter 13, Problem 44E, A value stream has three activities and two products. The units produced and shipped per week are 50

Required:

  1. 1. Calculate the ABC product cost (conversion cost) for Models K and R.
  2. 2. Calculate the value-stream average product cost (conversion cost). Assuming reasonable stability in the consumption patterns of the products and product mix, assess how well the products are grouped, based on similarity.
  3. 3. Calculate the cycle time for each product by dividing the total hours used for each product by the units produced of each product. Now calculate the DBC cost for each product. Comment on the significance of DBC for this setting.

1.

To determine

Compute product cost as per ABC costing.

Explanation

Value Stream:

Value stream consists of the processes through which a product goes; that is from procurement to delivery. In value stream, all processes are covered whether or not they add value to the product.

Computation of ABC conversion costs for model A and B:

ParticularsModel A ($)Model B ($)Total ($)
Activity one1 @ $4 per minute

(4×2,700)

10,800

(4×2,100)

8,400

19,200
Activity two1 @ $42.5 per hour

(42.5×65)

2,762.5

(42.5×15)

637.5

3,400
Activity three1 @ $37.5 per hour

(37.5×25)

937.5

(37.5×55)

2,062.5

3,000
Total (A)14,50011,10025,600
Number of units (B)50150200
Unit conversion cost (AB)29074 

Table (1)

Working Notes:

1

2.

To determine

Compute value-stream product cost.

3.

To determine

Compute cycle time for each product.

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Ch-13 P-1DQCh-13 P-2DQCh-13 P-3DQCh-13 P-4DQCh-13 P-5DQCh-13 P-6DQCh-13 P-7DQCh-13 P-8DQCh-13 P-9DQCh-13 P-10DQ
Ch-13 P-11DQCh-13 P-12DQCh-13 P-13DQCh-13 P-14DQCh-13 P-15DQCh-13 P-1MCQCh-13 P-2MCQCh-13 P-3MCQCh-13 P-4MCQCh-13 P-5MCQCh-13 P-6MCQCh-13 P-7MCQCh-13 P-8MCQCh-13 P-9MCQCh-13 P-10MCQCh-13 P-11MCQCh-13 P-12MCQCh-13 P-13MCQCh-13 P-14MCQCh-13 P-15MCQCh-13 P-16MCQCh-13 P-17MCQCh-13 P-18MCQCh-13 P-19MCQCh-13 P-20BEACh-13 P-21BEACh-13 P-22BEACh-13 P-23BEACh-13 P-24BEACh-13 P-25BEACh-13 P-26BEACh-13 P-27BEBCh-13 P-28BEBCh-13 P-29BEBCh-13 P-30BEBCh-13 P-31BEBCh-13 P-32BEBCh-13 P-33BEBCh-13 P-34ECh-13 P-35ECh-13 P-36ECh-13 P-37ECh-13 P-38ECh-13 P-39ECh-13 P-40ECh-13 P-41ECh-13 P-42ECh-13 P-43ECh-13 P-44ECh-13 P-45ECh-13 P-46ECh-13 P-47ECh-13 P-48ECh-13 P-49ECh-13 P-50ECh-13 P-51PCh-13 P-52PCh-13 P-53PCh-13 P-54PCh-13 P-55PCh-13 P-56PCh-13 P-57PCh-13 P-58PCh-13 P-59PCh-13 P-60PCh-13 P-61PCh-13 P-62CCh-13 P-63CCh-13 P-64CCh-13 P-65C

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