MANAGERIAL ACCOUNTING CONNECT ACCESS
17th Edition
ISBN: 9781265750879
Author: Garrison
Publisher: MCG
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Chapter 7.A, Problem 5P
PROBLEM 7A-5 Time-Driven Activity-Based Costing LO 7-6, LO 7-7
Athens Company is conducting a time-driven activity-based costing study in its Engineering Department. To aid the study, the company provided the following data regarding its Engineering Department and the customers served by the department:
| New | Engineering | |||
| Product | Change | Product | ||
| Design | Orders | Testing | ||
| Hours per unit of the activity | . 40 |
20 | 8 | |
| Customer | Customer | Customer | All | |
| A | B | C | Customers | |
| Number of new products designed.... | . 3 |
2 | 4 | 180 |
| Number of engineering change orders ... | . 5 |
2 | 2 | 250 |
| Number of products tested | . 8 | 4 | 6 | 160 |
Required:
- Using the customer cost analysis shown in Exhibit 7A-2 as your guide, compute the following:
- The cost per hour of the resource supplied in the Engineering Department.
- The time-driven activity rate per hour for each of Athens’ three activities.
- The total engineering costs consumed by Customer A, Customer B, and Customer C.
- Using the capacity analysis shown in Exhibit 7A-3 as your guide, compute the following:
- The used capacity in hours.
- The unused capacity in hours.
- The unused capacity in number of employees. (Do not round your answer to a whole number.)
- The impact on expenses of matching capacity with demand. (Be sure to round your potential adjustment in the number of employees to a whole number.)
- Assume that Athens is considering expanding its business such that the estimated number of new products designed would increase to 250, the number of engineering change orders would jump to 320, and the number of products tested would rise to 240. Using these revised figures, calculate the following:
- The used capacity in hours.
- The unused capacity in hours.
- The unused capacity in number of employees. (Do not round your answer to a whole number.)
- The impact on expenses of matching capacity with demand. (Be sure to round your potential adjustment in the number of employees to a whole number.)
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Question 4
ABC Manufacturing uses activity-based costing. Each product consists of 20 separate parts totaling $95 in direct
materials, and requires 2.5 hours of machine time to produce. Additional information is as follows:
Acitivity
Materials handling
Machine operations
Assembling
Packaging
Allocation Base
Number of parts
Number of hours
Number of parts
Number of completed products
$0.09
$5.22
$0.35
$2.00
Cost Allocation Rate
What is the cost of materials handling per product? Enter your response with two decimals but without a comma or $
sign.
I Problem 5-65
Customer-Profitability Analy-
sis, Activity-Based Costing
(LO 5-9)
Fresno Fiber Optics, Inc. manufactures fiber optic cables for the computer and telecommunications
industries. At the request of the company vice president of marketing, the cost management staff has
recently completed a customer-profitability study. The following activity-based costing information was
the basis for the analysis.
1. Operating income, Trace
Telecom: $7,000
Chapter 5 ActivtyBased Costing and Management
225
Customer-Related Activities
Cost Driver Base
Cost Driver Rate
Sales activity
Sales visits
$1,000
Order taking
Purchese orders
200
Units handied.
Special handing -
Special shipping
50
Shipments
500
Cost-driver data for two of Fresno's customers for the most recent year are
Customer-Related Activities
Trace Telecom
Caltex Computer
8 visits
6 vists
Sales activity.
Order taking
15 orders
20 orders
Special handing.
800 units handled.
600 unts handled
Special shipping
18 shipments
20 shipments…
PROBLEM 1
FIGHTING Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor hours (DLHs). The company has two products, H16Z and P25P, about which it has provided the following data:
H16Z
P25P
Direct materials per unit
P10.20
P50.50
Direct labor per unit
P8.40
P25.20
Direct labor-hours per unit
0.40
1.20
Annual production
30,000
10,000
The company’s estimated total manufacturing overhead for the year is P1,464,480 and the company’s estimated total direct labor-hours for the year is 24,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Activities and Activity Measures
Estimated Overhead Cost
Supporting direct labor (DLHs)
P 552,000
Setting…
Chapter 7 Solutions
MANAGERIAL ACCOUNTING CONNECT ACCESS
Ch. 7.A - EXERCISE 7A-1 Time-Driven Activity-Based Costing...Ch. 7.A -
EXERCISE 7A-2 Time-Driven Activity-Based Costing...Ch. 7.A - EXERCISE 7A-3 Time-Driven Activity-Based Costing...Ch. 7.A - PROBLEM 7A-4 Time-Driven Activity-Based Costing LO...Ch. 7.A - PROBLEM 7A-5 Time-Driven Activity-Based Costing LO...Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - What are unit-level, batch-level, product-level,...Ch. 7 - What types of costs should not be assigned to...
Ch. 7 - What are the two stages off allocation in...Ch. 7 - Why is the first stage of the allocation process...Ch. 7 - When activity-based costing is used, why do...Ch. 7 - Prob. 9QCh. 7 - Why is the form of activity-based costing...Ch. 7 - The Excel worksheet form that appears below is to...Ch. 7 - Prob. 2AECh. 7 - The Excel worksheet form that appears below is to...Ch. 7 - Prob. 1F15Ch. 7 - Prob. 2F15Ch. 7 - Prob. 3F15Ch. 7 - Prob. 4F15Ch. 7 - Prob. 5F15Ch. 7 - Prob. 6F15Ch. 7 - Prob. 7F15Ch. 7 - Prob. 8F15Ch. 7 - Prob. 9F15Ch. 7 - Prob. 10F15Ch. 7 - Prob. 11F15Ch. 7 - Prob. 12F15Ch. 7 - Prob. 13F15Ch. 7 - Prob. 14F15Ch. 7 - Prob. 15F15Ch. 7 - Prob. 1ECh. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - EXERCISE 7-7 First-Stage Allocations LO7-2
The...Ch. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - EXERCISE 7-13 Computing ABC Product Costs LO7-3,...Ch. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 -
PROBLEM 7-20 Evaluating the Profitability of...
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