EBK CORNERSTONES OF COST MANAGEMENT
3rd Edition
ISBN: 9781305147102
Author: MOWEN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 4, Problem 25E
To determine
Compute the allocated overhead cost for each product of B Company.
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Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation
system, product A has been assigned overhead of $26.87 per unit, while product B has been assigned $7.62 per unit. Management
feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and
cost driver information:
Cost Pools
Activity Costs
$ 415,000
120,000
44,000
The following cost information pertains to the production of A and B, just two of Hakara's many products:
Machine setup
Materials handling
Electric power
Number of units produced
Direct materials cost
Direct labor cost
Number of setup hours
Pounds of materials used
Kilowatt-hours
Product A
Product B
A
5,000
$ 22,000
$ 39,000
Cost per Unit
Cost Drivers
Setup hours
Pounds of materials
Kilowatt-hours
200
2,000
4,000
B
20,000
$ 26,000
$ 37,000
Activity Driver
Consumption
5,000
15,000
22,000
200
2,000
4,000
Required:
1. Use…
Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $24.82 per unit, while product B has been assigned $13.58 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information:
Cost Pools
Activity Costs
Cost Drivers
Activity Driver Consumption
Machine setup
$ 158,000
Setup hours
2,000
Materials handling
112,000
Pounds of materials
16,000
Electric power
25,000
Kilowatt-hours
25,000
The following cost information pertains to the production of A and B, just two of Hakara's many products:
A
B
Number of units produced
5,000
10,000
Direct materials cost
$ 32,000
$ 41,000
Direct labor cost
$ 41,000
$ 38,000
Number of setup hours
100
200
Pounds of materials used
1,000
1,000
Kilowatt-hours
2,000
4,000
Required:
1. Use…
Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $35.29 per unit, while product B has been assigned $8.25 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information:
Cost Pools
Activity Costs
Cost Drivers
Activity Driver Consumption
Machine setup
$
261,000
Setup hours
3,000
Materials handling
153,000
Pounds of materials
17,000
Electric power
38,000
Kilowatt-hours
38,000
The following cost information pertains to the production of A and B, just two of Hakara's many products:
A
B
Number of units produced
4,000
20,000
Direct materials cost
$
37,000
$
27,000
Direct labor cost
$
41,000
$
40,000
Number of setup hours
200
200
Pounds of materials used
1,000…
Chapter 4 Solutions
EBK CORNERSTONES OF COST MANAGEMENT
Ch. 4 - What is a predetermined overhead rate? Explain why...Ch. 4 - Describe what is meant by under- and overapplied...Ch. 4 - Explain how a plantwide overhead rate, using a...Ch. 4 - What are non-unit-related overhead activities?...Ch. 4 - What is an overhead consumption ratio?Ch. 4 - Overhead costs are the source of product cost...Ch. 4 - What is activity-based product costing?Ch. 4 - What are the six steps that define the design of...Ch. 4 - Explain how the cost of resources is assigned to...Ch. 4 - Prob. 10DQ
Ch. 4 - Identify and define two types of activity drivers.Ch. 4 - What are unit-level activities? Batch-level...Ch. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - Prob. 1CECh. 4 - Warner Company has the following data for the past...Ch. 4 - Lansing. Inc., provided the following data for its...Ch. 4 - Larsen, Inc., produces two types of electronic...Ch. 4 - Roberts Company produces two weed eaters: basic...Ch. 4 - Golding Bank provided the following data about its...Ch. 4 - Golding Bank provided the following data about its...Ch. 4 - Patterson Company produces wafers for integrated...Ch. 4 - Selected activities and other information are...Ch. 4 - Ripley, Inc., costs products using a normal...Ch. 4 - Predetermined Overhead Rate, Application of...Ch. 4 - Craig Company uses a predetermined overhead rate...Ch. 4 - Departmental Overhead Rates Mariposa, Inc.,...Ch. 4 - McCourt Company produces two types of leather...Ch. 4 - Deoro Company has identified the following...Ch. 4 - Prob. 16ECh. 4 - Secondary Activities Refer to the interview in...Ch. 4 - Bob Randall, cost accounting manager for Hemple...Ch. 4 - Prob. 19ECh. 4 - Bob Randall, cost accounting manager for Hemple...Ch. 4 - Silven Company has identified the following...Ch. 4 - Prob. 22ECh. 4 - Prob. 23ECh. 4 - Prob. 24ECh. 4 - Prob. 25ECh. 4 - Assume that the inspection activity has an...Ch. 4 - Consider the information given on two products and...Ch. 4 - Primera Company produces two products and uses a...Ch. 4 - Fisico Company produces exercise bikes. One of its...Ch. 4 - Prob. 30PCh. 4 - Glencoe First National Bank operated for years...Ch. 4 - Autotech Manufacturing is engaged in the...Ch. 4 - The Bienestar Cardiology Clinic has two major...Ch. 4 - Reducir, Inc., produces two different types of...Ch. 4 - Prob. 35PCh. 4 - Escuha Company produces two type of calculators:...
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