Managerial Accounting: Tools For Business Decision Making, Seventh Edition Wileyplus Card
7th Edition
ISBN: 9781118680698
Author: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
Publisher: John Wiley & Sons Inc
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Textbook Question
Chapter 4, Problem 4.4DI
Ready Ride is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools.
 
 (a) Compute the activity-based overhead rates for each pool.
 (b) Determine the overhead allocated to Job XZ3275 which has 150 pieces, requires 200 miles of driving, and 0.75 hours of logistics.
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Splish Brothers is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools.
Activity Cost Pool
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Cost Drivers
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EstimatedOverhead
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Estimated Use ofCost Driverper Activity
Loading and unloading
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Number of pieces
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$97,130
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88,300
Travel
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Miles driven
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443,250
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591,000
Logistics
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Hours
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82,880
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2,960
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Compute the activity-based overhead rates for each pool. (Round answers to 2 decimal places, e.g. 12.75.)
Activity Cost Pool
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Activity-BasedOverhead Rate
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Loading and unloading
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per piece
Travel
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per mile
Logistics
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Please fill in the table.
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:Â
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Cost Pools
Activity Costs
Cost Drivers
Activity Driver Consumption
Machine setup
$
261,000
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 Setup hours
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3,000
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Materials handling
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153,000
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 Pounds of materials
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17,000
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Electric power
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38,000
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 Kilowatt-hours
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38,000
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The following cost information pertains to the production of A and B, just two of Hakara's many products:
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A
B
Number of units produced
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4,000
Â
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20,000
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Direct materials cost
$
37,000
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$
27,000
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Direct labor cost
$
41,000
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$
40,000
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Number of setup hours
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200
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200
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Pounds of materials used
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1,000…
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:Â
Â
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
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The following cost information pertains to the production of A and B, just two of Hakara's many products:
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Â
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
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Required:
1. Use…
Chapter 4 Solutions
Managerial Accounting: Tools For Business Decision Making, Seventh Edition Wileyplus Card
Ch. 4 - Under what conditions is direct labor a valid...Ch. 4 - What has happened in recent industrial history to...Ch. 4 - In an automated manufacturing environment, what...Ch. 4 - What is generally true about overhead allocation...Ch. 4 - What are the principal differences between...Ch. 4 - What is the formula for computing activity-based...Ch. 4 - What steps are involved in developing an activity-...Ch. 4 - Prob. 8QCh. 4 - What is an activity cost pool?Ch. 4 - Prob. 10Q
Ch. 4 - Prob. 11QCh. 4 - What is the formula for assigning activity cost...Ch. 4 - What are the benefits of activity-based costing?Ch. 4 - What are the limitations of activity-based...Ch. 4 - Under what conditions is ABC generally the...Ch. 4 - Prob. 16QCh. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 4.1BECh. 4 - Finney Inc. has conducted an analysis of overhead...Ch. 4 - Splash Co. identifies the following activities...Ch. 4 - Mason Company manufactures four products in a...Ch. 4 - Morgana Company identifies three activities in its...Ch. 4 - Weisman, Inc. uses activity-based costing as the...Ch. 4 - Spud, Inc. a manufacturer of gourmet potato chips,...Ch. 4 - Prob. 4.8BECh. 4 - Pine and Danner is an architectural firm that is...Ch. 4 - Prob. 4.10BECh. 4 - Fixlt, Inc. operates 20 injection molding machines...Ch. 4 - Prob. 4.12BECh. 4 - Indicate whether the following statements are true...Ch. 4 - Compute activity-based overhead rates and assign...Ch. 4 - Adamson Company manufactures four lines of garden...Ch. 4 - Ready Ride is a trucking company. It provides...Ch. 4 - Saddle Inc. has two types of handbags: standard...Ch. 4 - Ayala Inc. has conducted the following analysis...Ch. 4 - EcoFabrics has budgeted overhead costs of 945,000....Ch. 4 - Altex Inc. manufactures two products: car wheels...Ch. 4 - Perdon Corporation manufactures safeslarge mobile...Ch. 4 - Santana Corporation manufactures snowmobiles in...Ch. 4 - Rojas Vineyards in Oakville, California, produces...Ch. 4 - Wilmington, Inc. manufactures five models of...Ch. 4 - Air United, Inc. manufactures two products:...Ch. 4 - Kragan Clothing Company manufactures its own...Ch. 4 - Health 'R Us, Inc., uses a traditional product...Ch. 4 - Santana Corporation manufactures snowmobiles in...Ch. 4 - William Mendel Sons, Inc. is a small...Ch. 4 - Venus Creations sells window treatments (shades,...Ch. 4 - Snap Prints Company is a small printing and...Ch. 4 - Lasso and Markowitz is a law firm that is...Ch. 4 - Manzeck Company operates a snow-removal service....Ch. 4 - Combat Fire, Inc. manufactures steel cylinders and...Ch. 4 - Prob. 4.2APCh. 4 - Shaker Stairs Co. designs and builds factory-made...Ch. 4 - Prob. 4.4APCh. 4 - Lewis and Stark is a public accounting firm that...Ch. 4 - CURRENT DESIGNS As you teamed in the previous...Ch. 4 - Prob. 4.1BYPCh. 4 - Prob. 4.2BYPCh. 4 - Curtis Rich, the cost accountant for Hi-Power...Ch. 4 - As discussed in the chapter, the principles...
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