Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
14th Edition
ISBN: 9781337802000
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 18, Problem 2ADM
A.
To determine
Activity-based costing (ABC) method: The costing method which allocates
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
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
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
[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…
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
0.60
Annual
Production
20,000 units
84,000 units
Additional information about the company follows:
a. Rims require $16 in direct materials per unit, and Posts require $12.
b. The direct labor wage rate is $15 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
Machine setups
Special processing
General factory
Activity Measure
Number of setups
Machine-hours
Estimated
Overhead Cost
Rims
$ 28,560
80
$ 159,600
6,000
Posts
130
0
Total
210
6,000
Direct labor-hours
$ 680,000
14,000
50,400
64,400
2. Determine the unit product cost of each product according to the ABC system. (Do not round intermediate…
Chapter 18 Solutions
Bundle: Financial & Managerial Accounting, Loose-leaf Version, 14th + Working Papers For Warren/reeve/duchac's Corporate Financial Accounting, 14th + ... Financial & Managerial Accounting,
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...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units of Simple and 146,100 of Removable, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: Â How much is the overhead allocated to each unit of Simple and Removable?arrow_forwardThe following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?arrow_forwardMedical Tape makes two products: Generic and Label. It estimates it will produce 423,694 units of Generic and 652,200 of Label, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: How much is the overhead allocated to each unit of Generic and Label?arrow_forward
- Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases: A. Total direct materials cost B. Electricity costs of 1,000 per month plus 0.10 per kilowatt-hour C. Per-unit cost of straight-line depreciation on factory equipment D. Salary of quality control supervisor, 20,000 per month E. Per-unit direct labor costarrow_forwardStep Costs, Relevant Range Bellati Inc. produces large industrial machinery. Bellati has a machining department and a group of direct laborers called machinists. Each machinist can machine up to 500 units per year. Bellati also hires supervisors to develop machine specification plans and oversee production within the machining department. Given the planning and supervisory work, a supervisor can oversee, at most, three machinists. Bellatis accounting and production history shows the following relationships between number of units produced and the annual costs of supervision and materials handling (by machinists): Required: 1. Prepare a graph that illustrates the relationship between direct labor cost and number of units produced in the machining department. (Let cost of direct labor be the vertical axis and number of units be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 2. Prepare a graph that illustrates the relationship between the cost of supervision and the number of units produced. (Let cost of supervision be the vertical axis and number of units be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 3. Suppose that the normal range of production is between 1,400 and 1,500 units and that the exact number of machinists is currently hired to support this level of activity. Further suppose that production for the next year is expected to increase by an additional 500 units. What is the increase in the cost of direct labor? Cost of supervision?arrow_forwardRequired 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 ofpostsarrow_forward
- Chhom Incorporated, manufactures and cells two products Product F and Product U4 Data concerning the expected production of each product and the expected total direct labor hours (DLH required to produce that output appear below Product F9 Product 04 Total direct labor-hoursi Expected Direct Labor-Hours Total Direct Production 300 600 Activity Cost Pools Labor-related Production orders order size Per Unit 4.0 2.0 The direct labor rate is $25.90 per DLH The direct materials cost per unit is $285 for Product F9 and $244 for Product 4 The company is considering adopting an activity based costing system with the following activity cost pools, activity measures, and expected activity Activity Measures DLHS orders MHS Estimated Overhead Cost Product $ 42,600 67,630 137,820 $ 248,050 Labor-Hours 1,200 1,200 2,400 1,200 400 3,300 Expected Activity Product U 1,200 GOO 3,100 Total 2,400 1,000 4,400arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.] Eagle Company uses a standard cost system that has provided the following data: Units of output manufactured: 85 Direct labor: Standard hours allowed: 2 hours per unit of product Standard wage rate: $17.00 per hour Actual direct labor: 190 hours, total cost of $3,610 The journal entry to record the cost of direct labor used in this period includes: Multiple Choice A debit to Work in Process Inventory of $3,230. A debit to Work in Process Inventory of $2,890. A credit to Direct Labor Rate Variance of $380. A credit to Direct Labor Rate Variance of $340.arrow_forwardProduct Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate $27 per machine hour $10 per direct labor hour $55 per setup $28 per inspection $11 per production order $8 per purchase order The activity-base usage quantities and units produced for each product were as follows: Elliptical Machines Fabrication Assembly Setup Inspecting Production scheduling Purchasing Activity Base Machine hours Direct labor hours Setups Inspections Production orders Purchase orders Units produced Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent. Total…arrow_forward
- A company manufacturing two products furnishes the following data Annual output Product Output units Machine Hours Purchase Orders Machine set-ups A 5000 20000 160 20 B 60000 120000 384 44 Total 65000 140000 544 64 The annual overheads are as under. Rs Volume related activity costs 4,50,000 Set up related costs 9,20,000 Purchase related costs 5,18,000 Total 1,888,000 You are required to calculate the overheads cost per unit of each product A and B based on Activity based costing method.arrow_forwardQuestion 2: Pedagogy Inc. is an e-book reader manufacturer. The company's ABC system has the following five activity cost pools and activity rates: Activity Cost Pools Labor related Direct Material cost per units Direct Labor cost per unit Number of units produced per year Machine related Machine setups Production orders Shipments Cost and activity data have been supplied for the following products: Peda 101 Peda 101 Activity rates $115.00 $7.50 400 $18.00 per direct labor hour $20.00 per machine hour $40 per setup $120.00 per order $15.00 per shipment 210 300 3 4 5 Peda 102 Direct labor hours Machine hours Machine setups Production orders Shipments Compute the unit product cost of each of the products listed above. $210.00 $5.00 600 Total Expected Activity Peda 102 910 2,000 7 9 17 Peda 103 $280.00 $2.50 900 Peda 103 1,510 3,000 125 10arrow_forwardProduct costing—various issues Clay Co. produces ceramic coffee mugsand pencil holders. Manufacturing overhead is assigned to production using an application rate based on direct labor hours.Required:a. For 2013, the company’s cost accountant estimated that total overhead costs incurred would be $420,000 and that a total of 50,000 direct labor hours would be worked. Calculate the amount of overhead to be applied for each direct labor hour worked on a production run.b. A production run of 400 coffee mugs used raw materials that cost $432 and used 40 direct labor hours at a cost of $10 per hour. Calculate the cost of each coffee mug produced.c. At the end of October 2013, 280 coffee mugs made in the production run in part b had been sold and the rest were in ending inventory. Calculate (1) the cost of the coffee mugs sold that would have been reported in the income statement and (2) the cost included in the October 31, 2013, finished goods inventory.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Financial & Managerial Accounting
Accounting
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cost Classifications - Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=QQd1_gEF1yM;License: Standard Youtube License