INTRO TO MANAGERIAL ACCT-CONNECT ACCESS
8th Edition
ISBN: 9781260118742
Author: BREWER
Publisher: MCG
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Chapter 4, Problem 3E
Compute ABC Product Costs L04−3
Lamer Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costingsystem contains the following six activity cost pools and activity rates:
Cost and activity data have been supplied for the following products
Compute the unit product cost of each product listed above.
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Chrzan, Incorporated, manufactures and sells two products: Product EO and Product NO. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
Product E0
Product Ne
Total direct labor-hours
Activity Cost Pools
Labor-related
Production orders
Order size
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated
Overhead
Cost
Multiple Choice
$33.94 per MH
$54.20 per MH
Direct
Expected Labor-Hours
Production
Per Unit
10.1
410
1,550
9.1
$51.98 per MH
$21.40 per MH
Activity
Measures
DLHS
orders
MHs
Total
Direct
Labor-
Hours
$ 301,890
61,087
585,366
$948,343
The activity rate for the Order Size activity cost pool under activity-based costing is closest to:
4,141
14, 105
18,246
Product E
4,141
850
5,550
Expected Activity
Product NO
14, 105
950
5,250
Total
18,246
1,800
10,800
Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activitybased costing system contains the following six activity cost pools and activity rates:
Required:How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?
Trimake Limited makes three main products, using broadly the same production methods
and equipment for each. A conventional product costing system is used at present, although
an activity-based costing (ABC) system is being considered. Details of the three products
for a typical period are:
Product X
Product Y
Product Z
Hours per
Labour
hours
1/2
1½
1
Costs relating to set-ups
Costs relating to machinery
Costs relating to materials handling
Costs relating to inspection
Total production overhead
Product X
Product Y
Product Z
unit
Total activities for the period:
75
115
480
670
Machine
hours
1½
1
3
Direct labour costs £6 per hour and production overheads are absorbed on a machine hour
basis. The rate for the period is £28 per machine hour.
Further analysis shows that the total of production overheads can be divided as
follows:
Number of Number of
set-ups
(%)
35
movements
of materials
12
21
87
120
Materials
per unit
£
20
15
30
100%
20
12
25
The following activity volumes are associated…
Chapter 4 Solutions
INTRO TO MANAGERIAL ACCT-CONNECT ACCESS
Ch. 4 - What are the three common approaches for assigning...Ch. 4 - Why does activity-based costing appeal to some...Ch. 4 - Why do departmental overheadrates something result...Ch. 4 - What are the four hierarchical levels of activity...Ch. 4 - Why activity-based costing is described as a...Ch. 4 - Why do overhead costs often shift from high-volume...Ch. 4 - What are the three major ways in which...Ch. 4 - What are the major limitations of activity-based...Ch. 4 - Prob. 1AECh. 4 - Prob. 2AE
Ch. 4 - Change the data in red so that the Data area looks...Ch. 4 - Prob. 1F15Ch. 4 - Prob. 2F15Ch. 4 - Prob. 3F15Ch. 4 - Greenvood Company manufactures two products14,000...Ch. 4 - Prob. 5F15Ch. 4 - Prob. 6F15Ch. 4 - Greenvood Company manufactures two products14,000...Ch. 4 - Prob. 8F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - Prob. 10F15Ch. 4 - Prob. 11F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - Prob. 13F15Ch. 4 - Prob. 14F15Ch. 4 - Greenwood Company manufactures two products14,000...Ch. 4 - ABC Cost Hierarchy L041 The following activities...Ch. 4 - Compute Activity Rates L042 Rustafson Corporation...Ch. 4 - Compute ABC Product Costs L043 Lamer Corporation...Ch. 4 - Contrast ABC and Conventional Product Costs L044...Ch. 4 - Assigning Overhead to Products in ABC L042, L043...Ch. 4 - Cost Hierarchy and Activity Measures L041 Various...Ch. 4 - Contrast ABC and Conventional Product Costs L042,...Ch. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Rocky Mountain Corporation makes two types of...Ch. 4 - Contrasting Activity-Based Costing and...Ch. 4 - Contrasting ABC and Conventional Product cost...Ch. 4 - ABC Cost Hierarchy L041 Mitchell Corporation...Ch. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Contrasting ABC and Conventional Product Costs...Ch. 4 - Contrast Activity-Based Costing and Conventional...Ch. 4 - Adria Company recently implemented an...
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