EBK CORNERSTONES OF COST MANAGEMENT
3rd Edition
ISBN: 9781305147102
Author: MOWEN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Textbook Question
Chapter 4, Problem 4CE
Larsen, Inc., produces two types of electronic parts and has provided the following data:
There are four activities: machining, setting up, testing, and purchasing.
Required:
- 1. Calculate the activity consumption ratios for each product.
- 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). When compared with the activity ratios, what can you say about the relative accuracy of a plantwide rate? Which product is undercosted?
- 3. What if the machine hours were used for the plantwide rate? Would this remove the cost distortion of a plantwide rate?
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Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe. Suppose that
Schell has conducted further research into its overhead and potential cost drivers. As a result, the company has compiled the following
detailed information, breaking total overhead into three activity pools:
Activity Pools
Material handling
Quality control
Machine maintenance
Req 1
Cost Driver
Number of moves
Number of inspections
Number of machine hours
Req 2 and 3
Required:
1. Calculate the activity rates for each activity pool assuming Schell uses an ABC system.
2. Calculate the amount of overhead that Schell will assign to the Standard floor mat line.
3. Determine the amount of overhead Schell will assign to the Deluxe product line.
Complete this question by entering your answers in the tabs below.
Material Handling
Quality Control
Machine maintenance
Cost Assigned
to Pool
Activity Rate
$ 2,068.00
$ 8,640.00
$ 14,120.00
Calculate the activity rates for…
Green Shade manufactures insulated windows. The firm’s repair and maintenance (R&M) cost is mixed and varies most directly with machine hours worked. The following data (on the attached picture) have been gathered from recent operations:
a. Use the high–low method to estimate a cost formula for repairs and maintenance.
b. Use least squares regression to estimate a cost formula for repairs and maintenance.
c. Does the answer to part (a) or to part (b) provide the better estimate of the relation ship between repairs and maintenance costs and machine hours? Why?
give me the answers to these fallowings as well:
11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?
12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?
13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z?
14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?
15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z?
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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