Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 2, Problem 2.22E
Direct, indirect, fixed, and variable costs. California Tires manufactures two types of tires that it sells as wholesale products to various specialty retail auto supply stores. Each tire requires a three-step process. The first step is mixing. The mixing department combines some of the necessary direct materials to create the material mix that will become part of the tire. The second step includes the forming of each tire where the materials are layered to form the tire. This is an entirely automated process. The final step is finishing, which is an entirely manual process. The finishing department includes curing and quality control.
- 1. Costs involved in the process are listed next. For each cost, indicate whether it is a direct variable, direct fixed, indirect variable, or indirect fixed cost, assuming “units of production of each kind of tire” is the cost object.
| Costs: | |
| Rubber | Mixing department manager |
| Reinforcement cables | Material handlers in each department |
| Other direct materials | Custodian in factory |
| Night guard in factory | |
| Depreciation on mixing machines | Machinist (running the mixing machine) |
| Rent on factory building | Machine maintenance personnel in each department |
| Fire insurance on factory building | Maintenance supplies for factory |
| Factory utilities | Cleaning supplies for factory |
| Finishing department hourly laborers | Machinist (running the forming machines) |
- 2. If the cost object were the “mixing department” rather than units of production of each kind of tire, which preceding costs would now be direct instead of indirect costs?
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Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs. The following information is available:
Cost Titanium Aluminium Total Cost
Assembly 500 Mach. hours 500 Mach. hours $60,000
Inspections 350 150 $100,000
2,100 labor hours 1,900 labor hours
Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much assembly cost is assigned to the titanium racquets?
Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs. The following information is available:
Cost Titanium Aluminium Total Cost
Assembly 500 Mach. hours 500 Mach. hours $60,000
Inspections 350 150 $100,000
2,100 labor hours 1,900 labor hours
3. Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much assembly cost is assigned to the titanium racquets?
Group of answer choices
$31,500
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$30,000
$21,000
Maxion Jantaş is a manufactures of aluminum wheel for cars and they are currentlyproducing wheels in their Manisa plant. During the production, wheels first go throughassembly department and then proceed to testing department. The company is using aprocess costing system which has a single direct‐cost category, direct materials, and a singleindirect‐cost category, conversion costs, for the assembly department. Conversion costsare added evenly during the process whereas direct materials are added at the beginningof the process. Furthermore, the company is using the weighted‐average method ofprocess costing. Data for the assembly department for August 2018 are as follows:
1. Calculate total costs assigned to completed and transferred out units and workingprocess ending units using the current process costing method. (weighted averagemethod) Show each step of the five‐step approach and your calculations clearly.2. Assume the company is using FIFO method of process costing. Calculate total…
Chapter 2 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 2 - Define cost object and give three examples.Ch. 2 - Define direct costs and indirect costs.Ch. 2 - Prob. 2.3QCh. 2 - Name three factors that will affect the...Ch. 2 - Define variable cost and fixed cost. Give an...Ch. 2 - What is a cost driver? Give one example.Ch. 2 - What is the relevant range? What role does the...Ch. 2 - Explain why unit costs must often be interpreted...Ch. 2 - Prob. 2.9QCh. 2 - What are three different types of inventory that...
Ch. 2 - Distinguish between inventoriable costs and period...Ch. 2 - Define the following: direct material costs,...Ch. 2 - Describe the overtime-premium and idle-time...Ch. 2 - Define product cost. Describe three different...Ch. 2 - What are three common features of cost accounting...Ch. 2 - Prob. 2.16MCQCh. 2 - Comprehensive Care Nursing Home is required by...Ch. 2 - Frisco Corporation is analyzing its fixed and...Ch. 2 - Year 1 financial data for the ABC Company is as...Ch. 2 - The following information was extracted from the...Ch. 2 - Computing and interpreting manufacturing unit...Ch. 2 - Direct, indirect, fixed, and variable costs....Ch. 2 - Classification of costs, service sector. Market...Ch. 2 - Classification of costs, merchandising sector....Ch. 2 - Classification of costs, manufacturing sector. The...Ch. 2 - Variable costs, fixed costs, total costs. Bridget...Ch. 2 - Variable and Fixed Costs. Consolidated Motors...Ch. 2 - Variable costs, fixed costs, relevant range. Gummy...Ch. 2 - Prob. 2.29ECh. 2 - Cost drivers and functions. The representative...Ch. 2 - Total costs and unit costs, service setting....Ch. 2 - Total and unit cost, decision making. Gayles...Ch. 2 - Inventoriable costs versus period costs. Each of...Ch. 2 - Computing cost of goods purchased and cost of...Ch. 2 - Cost of goods purchased, cost of goods sold, and...Ch. 2 - Flow of Inventoriable Costs. Renkas Heaters...Ch. 2 - Cost of goods manufactured, income statement,...Ch. 2 - Cost of goods manufactured, income statement,...Ch. 2 - Income statement and schedule of cost of goods...Ch. 2 - Interpretation of statements (continuation of...Ch. 2 - Income statement and schedule of cost of goods...Ch. 2 - Terminology, interpretation of statements...Ch. 2 - Labor cost, overtime, and idle time. David...Ch. 2 - Missing records, computing inventory costs. Ron...Ch. 2 - Comprehensive problem on unit costs, product...Ch. 2 - Prob. 2.46PCh. 2 - Cost classification; ethics. Paul Howard, the new...Ch. 2 - Prob. 2.48P
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