Concept explainers
Activity-based costing and product cost distortion
The management of Four Finger Appliance Company in Exercise 14 has asked you to use activity-based costing instead of direct labor hours to allocate
Determine the three activity rates (assembly, test and pack, and setup).
Determine the total factory overhead and factory overhead per unit allocated to each product using the activity rates in (A).

Want to see the full answer?
Check out a sample textbook solution
Chapter 4 Solutions
Managerial Accounting
- [The following information applies to the questions displayed below.] Delph Company uses job-order costing with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that 50,000 machine-hours would be required for the period’s estimated level of production. It also estimated $910,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $1.80 per machine-hour. Because Delph has two manufacturing departments—Molding and Fabrication—it is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine-hours. The company gathered the following information to enable calculating departmental overhead rates: Molding Fabrication Total Machine-hours 20,000 30,000 50,000 Fixed manufacturing overhead cost $ 700,000 $ 210,000 $ 910,000 Variable manufacturing overhead cost per machine-hour $ 3.00 $ 1.00 During the year, the…arrow_forwardsolve the attached questionsarrow_forwardRespond the attached questionsarrow_forward
- Given the data, fill in the empty boxes.arrow_forwardJH and Joe corporations are members of a consolidated group. JH owns 10 shares of the marketable stock having $10,000 basis in total. In 2024, JH sells all the shares to Joe for $40,000. In 2025, Joe sells 5 shares of the stock to Ethan corporation, an unrelated entity outside the consolidated group, for $30,000. In 2026, Joe sells the other 5 shares of the stock to Young corporation, an unrelated entity outside the consolidated group, for $50,000. Explain and/or illustrate the timing of and extent to which JH’s intercompany item is taken into account for consolidated taxable income purposes.arrow_forwardScenario Bradburn Corporation was formed five years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Bradburn and is its current president. The corporation has been successful, but it currently is experiencing a shortage of funds. On June 10, 2026, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $35,000 notes, which are due on June 30, 2026, and September 30, 2026. Another note of $6,000 is due on March 31, 2027, but he expects no difficulty in paying this note on its due date. Brown explained that Bradburn’s cash flow problems are due primarily to the company’s desire to finance a $300,000 plant expansion over the next two fiscal years through internally generated funds. Review the attached income statement and balance sheet for the company and repond to the following questions: Calculations Calculate the current ratio for fiscal years 2025 and 2026. Calculate the…arrow_forward
- Splish Company reported the following amounts in the stockholders' equity section of its December 31, 2024, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 1,800 shares issued) $180,000 Common stock, $5 par (94,000 shares authorized, 18,800 shares issued) Additional paid-in capital Retained earnings Total 94,000 131,000 478,000 $883,000 During 2025, Splish took part in the following transactions concerning stockholders' equity. 1. 2. Paid the annual 2024 $10 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2024. Purchased 1,500 shares of its own outstanding common stock for $43 per share. Splish uses the cost method. 3. Reissued 800 treasury shares for land valued at $36,200. 4. Issued 540 shares of preferred stock at $104 per share. 5. 6. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $41 per share. Issued the stock dividend. 7.…arrow_forwardThe following data were taken from the balance sheet accounts of Marigold Corporation on December 31, 2024. $575,000 Current assets Debt investments (trading) 567,000 Common stock (par value $10) 535,000 Paid-in capital in excess of par 139,000 Retained earnings 802,000 Prepare the required journal entries for the following unrelated items. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.) a. A 5% stock dividend is (1) declared and (2) distributed at a time when the market price per share is $39. b. The par value of the common stock is reduced to $2 with a 5-for-1 stock split. C. A dividend is declared January 5, 2025, and paid January 25, 2025, in bonds held as an investment. The bonds have a book value of $101,000 and a fair value…arrow_forwardwhat type of hardware would a cpa use or requirearrow_forward
- The original sale of the $50 par value common shares of Swifty Company was recorded as follows: Cash Common Stock Paid-in Capital in Excess of Par Transactions: 278,400 240,000 38,400 (a) Bought 390 shares of common stock as treasury shares at $63. (b) Sold 140 shares of treasury stock at $60. (c) Sold 70 treasury shares at $68. Record the treasury stock transactions (given above) under the cost method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)arrow_forwardThe original sale of the $50 par value common shares of Splish Company was recorded as follows: Cash Common Stock Paid-in Capital in Excess of Par 256,500 225,000 31,500 Transactions: (a) Bought 380 shares of common stock as treasury shares at $61. (b) Sold 100 shares of treasury stock at $59. (c) Sold 50 treasury shares at $67. Record the treasury stock transactions (given above) under the cost method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)arrow_forwardIndicate the principal effects of a stock dividend versus a stock split on the issuing corporation. Respond in the spaces as follows: Change and No Change. Number of Shares Outstanding Par Value per Share Total Par Outstanding Stock Dividend Stock Split Retained Earnings Total Stockholders' Equity Composition of Stockholders' Equity > > > >arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- 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 LearningExcel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning




