Managerial Accounting - With Access
3rd Edition
ISBN: 9781259847424
Author: Whitecotton
Publisher: MCG
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Question
Chapter 4, Problem 5E
To determine
Concept introduction:
Activity Based Costing (ABC):
ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.
To calculate:
The Amount of overhead assigned to each product
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Check out a sample textbook solutionChapter 4 Solutions
Managerial Accounting - With Access
Ch. 4 - What is the difference between a volume-based cost...Ch. 4 - Explain the statement that traditional costing...Ch. 4 - Prob. 3QCh. 4 - How does activity-based costing differ from...Ch. 4 - What types of business might use activity-based...Ch. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Why must costs be classified into different...Ch. 4 - Prob. 10Q
Ch. 4 - Prob. 11QCh. 4 - Explain the difference between the activity-rate...Ch. 4 - Define activity-based management and explain how...Ch. 4 - Prob. 14QCh. 4 - Prob. 15QCh. 4 - What is non-value-added activity. Considering the...Ch. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 1MCCh. 4 - Both traditional and ABC cost systems focus on...Ch. 4 - Prob. 3MCCh. 4 - Number of setups is an example of a a. Unit-level...Ch. 4 - Prob. 5MCCh. 4 - Prob. 6MCCh. 4 - Prob. 7MCCh. 4 - Prob. 8MCCh. 4 - Prob. 9MCCh. 4 - Prob. 10MCCh. 4 - Prob. 1MECh. 4 - Prob. 2MECh. 4 - Prob. 3MECh. 4 - Identifying terms in ABC and ABM Use the following...Ch. 4 - Prob. 5MECh. 4 - Prob. 6MECh. 4 - Assigning Costs Using Activity Proportions Refer...Ch. 4 - Calculating Activity Rates for ABC System Lakeside...Ch. 4 - Prob. 9MECh. 4 - Prob. 10MECh. 4 - Prob. 11MECh. 4 - Prob. 12MECh. 4 - Classifying Activities According to Level,...Ch. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Assigning Costs Using Activity Rates Refer to the...Ch. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Comparing Traditional Costing Systems and...Ch. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Identifying Value-Added and Non-Value-Added...Ch. 4 - Prob. 17ECh. 4 - Prob. 18ECh. 4 - Calculating Target Cost Majesty Company uses...Ch. 4 - Assigning Costs using Traditional System, ABC...Ch. 4 - Assigning Costs using Traditional System, ABC...Ch. 4 - Prob. 1.3GAPCh. 4 - Prob. 1.4GAPCh. 4 - Prob. 1.5GAPCh. 4 - Prob. 2.1GAPCh. 4 - Prob. 2.2GAPCh. 4 - Prob. 2.3GAPCh. 4 - Prob. 2.4GAPCh. 4 - Prob. 2.5GAPCh. 4 - Prob. 3.1GAPCh. 4 - Prob. 3.2GAPCh. 4 - Prob. 3.3GAPCh. 4 - Prob. 3.4GAPCh. 4 - Prob. 3.5GAPCh. 4 - Prob. 3.6GAPCh. 4 - Prob. 3.7GAPCh. 4 - Prob. 3.8GAPCh. 4 - Prob. 4.1GAPCh. 4 - Describing the Impact of ABM and TQM on a Company...Ch. 4 - Prob. 4.3GAPCh. 4 - Prob. 4.4GAPCh. 4 - Describing the Impact of ABM and TQM on a Company...Ch. 4 - Prob. 4.6GAPCh. 4 - Prob. 4.7GAPCh. 4 - Prob. 4.8GAPCh. 4 - Prob. 5.2GAPCh. 4 - Prob. 1.1GBPCh. 4 - Prob. 1.2GBPCh. 4 - Prob. 1.3GBPCh. 4 - Prob. 1.4GBPCh. 4 - Prob. 1.5GBPCh. 4 - Prob. 2.1GBPCh. 4 - Prob. 2.2GBPCh. 4 - Prob. 2.3GBPCh. 4 - Prob. 2.4GBPCh. 4 - Prob. 2.5GBPCh. 4 - Prob. 3.1GBPCh. 4 - Selecting Cost Drivers, Assigning Costs using...Ch. 4 - Prob. 3.3GBPCh. 4 - Prob. 3.4GBPCh. 4 - Prob. 3.5GBPCh. 4 - Prob. 3.6GBPCh. 4 - Prob. 3.7GBPCh. 4 - Prob. 3.8GBPCh. 4 - Prob. 4.1GBPCh. 4 - Prob. 4.2GBPCh. 4 - Prob. 4.3GBPCh. 4 - Prob. 4.4GBPCh. 4 - Selecting Cost Drivers, Assigning Costs Using...Ch. 4 - Prob. 4.6GBPCh. 4 - Prob. 4.7GBPCh. 4 - Prob. 4.8GBPCh. 4 - Defining Concepts of Target Costing, Just-in-Time,...Ch. 4 - Defining Concepts of Target Costing, Just-in-Time,...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Overhead costs are assigned to each product based on __________________. A. the proportion of that products use of the cost driver B. a predetermined overhead rate for a single cost driver C. price of the product D. machine hours per productarrow_forwardRefer to the data given in Problem 4.36 and suppose that the expected activity costs are reported as follows (all other data remain the same): The per unit overhead cost using the 14 activity-based drivers is 1,108 and 779 for Cylinder A and Cylinder B, respectively. Required: 1. Determine the percentage of total costs represented by the three most expensive activities. 2. Allocate the costs of all other activities to the three activities identified in Requirement 1. Allocate the other activity costs to the three activities in proportion to their individual activity costs. Now assign these total costs to the products using the drivers of the three chosen activities. 3. Using the costs assigned in Requirement 2, calculate the percentage error using the ABC costs as a benchmark. Comment on the value and advantages of this ABC simplification.arrow_forwardCarltons Kitchens three cost pools and overhead estimates are as follows: Compare the overhead allocation using: A. The traditional allocation method B. The activity-based costing method (Hint: the traditional method uses machine hours as the allocation base.)arrow_forward
- Using the data in P4-2 and Microsoft Excel: 1. Separate the variable and fixed elements. 2. Determine the cost to be charged to the product for the year. 3. Determine the cost to be charged to factory overhead for the year. 4. Determine the plotted data points using Chart Wizard. 5. Determine R2. 6. How do these solutions compare to the solutions in P4-2 and P4-3? 7. What does R2 tell you about this cost model?arrow_forwardFrenchys has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?arrow_forwardRex Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The overhead and estimated usage are: Compute the overhead rate for each activity.arrow_forward
- Caseys Kitchens three cost pools and overhead estimates are as follows: Compare the overhead allocation using: A. The traditional allocation method B. The activity based costing method (Hint: the traditional method uses machine hours as the allocation base.)arrow_forwardUse the following information for Brief Exercises 4-27 and 4-28: Quillen Company manufactures a product in a factory that has two producing departments, Cutting and Sewing, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of maintenance hours. The following data pertain to Quillen: Brief Exercises 4-27 (Appendix 4B) Assigning Support Department Costs by Using the Direct Method Refer to the information for Quillen Company above. Required: 1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratiosone for Cutting and the other for Sewing.) 2. Allocate the support department costs to the producing departments by using the direct method.arrow_forwardFreeman Furnishings has summarized its data as shown: Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hoursarrow_forward
- The cost behavior patterns below are lettered A through H. The vertical axes of the graphs represent total dollars of expense, and the horizontal axes represent production in units, machine hours, or direct labor hours. In each case, the zero point is at the intersection of the two axes. Each graph may be used no more than once. Required: Select the graph that matches the lettered cost described here. a. Depreciation of equipmentthe amount of depreciation charged is computed based on the number of machine hours that the equipment was operated. b. Electricity billflat fixed charge, plus a variable cost after a certain number of kilowatt hours are used. c. City water billcomputed as follows: d. Depreciation of equipmentthe amount is computed by the straight-line method. e. Rent on a factory building donated by the citythe agreement calls for a fixed fee payment, unless 200,000 labor hours are worked, in which case no rent need be paid. f. Salaries of repair workersone repair worker is needed for every 1,000 machine hours or less (i.e., 0 to 1,000 hours requires one repair worker, 1,001 to 2,000 hours requires two repair workers, etc.).arrow_forwardActivity cost pools, activity rates, and product costs using activity-based costing Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows: The estimated activity-base usage and unit information for two product lines was determined as follows: A. Determine the activity rate for each activity cost pool. B. Determine the activity-based cost per unit of each product.arrow_forwardPatterson Company produces wafers for integrated circuits. Data for the most recent year are provided: aCalculated using number of dies as the single unit-level driver. bCalculated by multiplying the consumption ratio of each product by the cost of each activity. Required: 1. Using the five most expensive activities, calculate the overhead cost assigned to each product. Assume that the costs of the other activities are assigned in proportion to the cost of the five activities. 2. Calculate the error relative to the fully specified ABC product cost and comment on the outcome. 3. What if activities 1, 2, 5, and 8 each had a cost of 650,000 and the remaining activities had a cost of 50,000? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Comment on the implications for the approximately relevant approach.arrow_forward
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