FINANCIAL+MAGNAGERIAL ACCOUNTING LL
14th Edition
ISBN: 9781337448529
Author: WARREN
Publisher: CENGAGE C
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Chapter 18, Problem 2ADM
A.
To determine
Activity-based costing (ABC) method: The costing method which allocates overheads to the products based on factory overhead rate for each activity or cost object, according to the cost pooled for the cost drivers (allocation base).
To compute: The activity-cost per unit for assembly labor classification-3
B.
To determine
To discuss: About the acceptance or rejection of the product engineer’s proposal
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Required information
[The following information applies to the questions displayed below.]
Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:
Direct Labor-Hours
per unit
0.40
0.80
Annual Production
18,000 units
76,000 units
Rims
Posts
Additional information about the company follows:
a. Rims require $10 in direct materials per unit, and Posts require $7.
b. The direct labor wage rate is $17 per hour.
c. Rims are more complex to manufacture than Posts and they require special equipment.
d. The ABC system has the following activity cost pools:
Estimated Activity
Activity Cost Pool
Mach ine setups
Special process ing
General factory
Activity Measure
Number of setups
Mach ine-hours
Direct labor-hours
Estimated
Overhead Cost
$ 25,080
$ 122,360
$ 702,000
Rims
80
2,000
7,200
Total
300
2,000
68,000
Posts
220
60,800
2. Determine the unit product cost of each product according to the ABC system. (Do not round intermediate…
Required information
Skip to question
[The following information applies to the questions displayed below.]
Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:
Direct Labor-Hours per unit
Annual Production
Rims
0.60
26,000 units
Posts
0.60
84,000 units
Additional information about the company follows:
Rims require $17 in direct materials per unit, and Posts require $14.
The direct labor wage rate is $20 per hour.
Rims are more complex to manufacture than Posts and they require special equipment.
The ABC system has the following activity cost pools:
Activity Cost Pool
Activity Measure
Estimated Activity
Estimated Overhead Cost
Rims
Posts
Total
Machine setups
Number of setups
$ 39,480
80
320
400
Special processing
Machine-hours
$ 146,160
3,000
0
3,000
General factory
Direct labor-hours
$ 1,092,000
15,600
50,400
66,000
What us the unit cost ofposts
Required information
[The following information applies to the questions displayed below.]
Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:
Rims
Posts
Direct Labor-
Hours per unit
0.70
0.80
Annual
Production
Additional information about the company follows:
a. Rims require $14 in direct materials per unit, and Posts require $10.
b. The direct labor wage rate is $20 per hour.
Activity Cost Pool
Machine setups
Special processing
General factory
26,000 units
90,000 units
c. Rims are more complex to manufacture than Posts and they require special equipment.
d. The ABC system has the following activity cost pools:
Unit product cost of Rims
Unit product cost of Posts
Activity Measure
Number of setups
Machine-hours
Direct labor-hours
Estimated
Overhead Cost
$ 33,300
$ 172,800
$ 858,000
Estimated Activity
Rims
70
3,000
18,200
Posts
230
0
72,000
Total
300
3,000
90,200
2. Determine the unit product cost of each product…
Chapter 18 Solutions
FINANCIAL+MAGNAGERIAL ACCOUNTING LL
Ch. 18 - Why would management be concerned about the...Ch. 18 - Why would a manufacturing company with multiple...Ch. 18 - How do the multiple production department and the...Ch. 18 - Under what two conditions would the multiple...Ch. 18 - Prob. 5DQCh. 18 - Prob. 6DQCh. 18 - Prob. 7DQCh. 18 - Under what circumstances might the activity-based...Ch. 18 - Prob. 9DQCh. 18 - Prob. 10DQ
Ch. 18 - Single plantwide factory overhead rate The total...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Activity-based costing: factory overhead costs The...Ch. 18 - Activity-based costing: selling and administrative...Ch. 18 - Activity-based costing for a service business...Ch. 18 - Single plantwide factory overhead rate Nixon...Ch. 18 - Single plantwide factory overhead rate Mozart...Ch. 18 - Single plantwide factory overhead rate Sally...Ch. 18 - Product costs and product profitability reports,...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Single plantwide and multiple production...Ch. 18 - Single plantwide and multiple production...Ch. 18 - Identifying activity bases in an activity-based...Ch. 18 - Product costs using activity rates Nozama.com Inc....Ch. 18 - Product costs using activity rates Atlas...Ch. 18 - Activity rates and product costs using...Ch. 18 - Activity cost pools, activity rates, and product...Ch. 18 - Activity-based costing and product cost distortion...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Activity-based costing and product cost distortion...Ch. 18 - Single plantwide rate and activity-based costing...Ch. 18 - Evaluating selling and administrative cost...Ch. 18 - Construct and interpret a product profitability...Ch. 18 - Activity-based costing and customer profitability...Ch. 18 - Activity-based costing for a service company...Ch. 18 - Activity-based costing for a service company...Ch. 18 - Single plantwide factory overhead rate Orange...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Activity-based and department rate product costing...Ch. 18 - Activity-based product costing Mello Manufacturing...Ch. 18 - Allocating selling and administrative expenses...Ch. 18 - Product costing and decision analysis for a...Ch. 18 - Single plantwide factory overhead rate Spoiled Cow...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Activity-based department rate product costing and...Ch. 18 - Activity-based product costing Sweet Sugar Company...Ch. 18 - Allocating selling and administrative expenses...Ch. 18 - Product costing and decision analysis for a...Ch. 18 - Activity-based product cost improvement Gourmet...Ch. 18 - Prob. 2ADMCh. 18 - Production run size and activity improvement...Ch. 18 - Prob. 4ADMCh. 18 - Ethics in Action The controller of Tri Con Global...Ch. 18 - Communication The controller of New Wave Sounds...
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