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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information for Brief Exercises 5-29 and 5-30:

Cinturas Company produces two types of men’s shirts: casual and formal. There are four activities associated with the two products. Drivers for the four activities are as follows:

Chapter 5, Problem 30BEB, Use the following information for Brief Exercises 5-29 and 5-30: Cinturas Company produces two types , example  1

5-30 Activity Rates

Refer to the information above for Cinturas Company. The following activity data have been collected:

Chapter 5, Problem 30BEB, Use the following information for Brief Exercises 5-29 and 5-30: Cinturas Company produces two types , example  2

Required:

Calculate the activity rates that would be used to assign costs to each product.

To determine

Compute activity rates used to assign costs to each product.

Explanation

Consumption Ratio:

Consumption ratio is the fraction of each activity that is consumed by a product. Activity drivers are used to calculate the activity output, and then it is further used to calculate the activity consumption.

Use the following formulae to calculate consumption ratio of Company C’s casual:

Activity Rates=Activity Costs Total Driver Quantity

Activity Ratio
Overhead Activity

Activity Costs

($)

(A)

Total Driver Quantity

(Hours)

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