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Concept explainers
Santana Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin, plant. The following costs are budgeted for the first quarter’s operations.
Machine setup, indirect materials | $4,000 |
Inspections | 16,000 |
Tests | 4,000 |
Insurance, plant | 110,000 |
Engineering design | 140,000 |
520,000 | |
Machine setup, indirect labor | 20,000 |
Property taxes | 29,000 |
Oil, heating | 19,000 |
Electricity, plant lighting | 21,000 |
Engineering prototypes | 60,000 |
Depreciation, plant | 210,000 |
Electricity, machinery | 36,000 |
Machine maintenance wages | 19,000 |
Instructions
Classify the above costs of Santana Corporation into activity cost pools using the following: engineering, machinery, machine setup, quality control, factory utilities, maintenance. Next, identify a cost driver that may be used to assign each cost pool to each line of snowmobiles.
E4-12 Having itemized its costs for the first quarter of next year's budget. Santana Corporation desires to install an activity-based costing system. First, it identified the activity cost pools in which to accumulate factory overhead. Second, it identified the relevant cost drivers. (This was done in E4-6.)
Instructions
Using the activity cost pools identified in E4-6. classify each of those cost pools as either unit-level, batch-level, product-level, or facility-level.
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Chapter 4 Solutions
Managerial Accounting, Binder Ready Version: Tools for Business Decision Making
Additional Business Textbook Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Financial Accounting
Financial Accounting (11th Edition)
Intermediate Accounting (2nd Edition)
Financial Accounting: Tools for Business Decision Making, 8th Edition
Financial Accounting, Student Value Edition (5th Edition)
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