MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Cost Accounting
16th Edition
ISBN: 9780134476384
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 9, Problem 9.45P
1.
To determine
Budgeted Fixed Manufacturing Overhead Rate:
The budgeted fixed manufacturing overhead rate is that rate at which the total budgeted fixed overhead costs are allocated. This is a rate which is determined so that the fixed overhead which is estimated can be allocated to the available units according to that rate.
To determine: The way in which the budgeted fixed cost per meal of $1.46 in 2017 is calculated.
2.
To determine
The way in which hospitals will be charged for each meal of M and the reaction of the hospital controllers to the price.
3.
To determine
The alternative cost-based price per meal that can be proposed and is more acceptable and the steps that M and W can take to make this price profitable in the long run.
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Cost allocation, downward demand spiral. Meals To Go operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Mealman, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,460,000 meals a year. In 2017, based on estimates from each hospital controller, Mealman budgeted for 1,050,000 meals a year. Budgeted fixed costs in 2017 were $1,533,000. Each hospital was charged $6.16 per meal—$4.70 variable costs plus $1.46 allocated budgeted fixed cost. Recently, the hospitals have been complaining about the quality of Mealman’s meals and their rising costs. In mid-2017, Meals To Go’s president announces that all Meals To Go hospitals and support facilities will be run as profit centers. Hospitals will be free to purchase quality-certified services from outside the system. Dean Wright, Mealman’s controller, is preparing the 2018 budget. He hears that three hospitals have decided to use outside suppliers for their meals, which…
Cost allocation, downward demand spiral. Meals To Go operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Mealman, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,460,000 meals a year. In 2017, based on estimates from each hospital controller, Mealman budgeted for 1,050,000 meals a year.Budgeted xed costs in 2017 were $1,533,000. Each hospital was charged $6.16 per meal—$4.70 variable costs plus $1.46 allocated budgeted xed cost. Recently, the hospitals have been complaining about the quality of Mealman’s meals and their rising costs. In mid-2017, Meals To Go’s president announces that all Meals To Go hospitals and support facilities will be run as prot centers. Hospitals will be free to purchase quality-certied services from outside the system. Dean Wright, Mealman’s controller, is preparing the 2018 budget. He hears that three hospitals have decided to use outside suppliers for their meals, which will…
Meals To Go operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Mealman, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,460,000 meals a year. In 2017, based on estimates from each hospital controller, Mealman budgeted for 1,050,000 meals a year. Budgeted fixed costs in 2017 were $1,533,000. Each hospital was charged $6.16 per meal—$4.70 variable costs plus $1.46 allocated budgeted fixed cost. Recently, the hospitals have been complaining about the quality of Mealman’s meals and their rising costs. In mid-2017, Meals To Go’s president announces that all Meals To Go hospitals and support facilities will be run as profit centers. Hospitals will be free to purchase quality-certified services from outside the system. Dean Wright, Mealman’s controller, is preparing the 2018 budget. He hears that three hospitals have decided to use outside suppliers for their meals, which will reduce the 2018 estimated demand to…
Chapter 9 Solutions
MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Cost Accounting
Ch. 9 - Differences in operating income between variable...Ch. 9 - Why is the term direct costing a misnomer?Ch. 9 - Do companies in either the service sector or the...Ch. 9 - Explain the main conceptual issue under variable...Ch. 9 - Companies that make no variable-cost/fixed-cost...Ch. 9 - The main trouble with variable costing is that it...Ch. 9 - Give an example of how, under absorption costing,...Ch. 9 - What are the factors that affect the breakeven...Ch. 9 - Critics of absorption costing have increasingly...Ch. 9 - What are two ways of reducing the negative aspects...
Ch. 9 - Prob. 9.11QCh. 9 - Describe the downward demand spiral and its...Ch. 9 - Will the financial statements of a company always...Ch. 9 - Prob. 9.14QCh. 9 - The difference between practical capacity and...Ch. 9 - In comparing the absorption and variable cost...Ch. 9 - Queen Sales, Inc. has just completed its first...Ch. 9 - King Tooling has produced and sold the following...Ch. 9 - The following information relates to Drexler Inc.s...Ch. 9 - Prob. 9.20MCQCh. 9 - Variable and absorption costing, explaining...Ch. 9 - Throughput costing (continuation of 9-21). The...Ch. 9 - Variable and absorption costing, explaining...Ch. 9 - Throughput costing (continuation of 9-23). The...Ch. 9 - Variable versus absorption costing. The Tomlinson...Ch. 9 - Absorption and variable costing. (CMA) Miami,...Ch. 9 - Absorption versus variable costing. Horace Company...Ch. 9 - Candyland uses standard costing to produce a...Ch. 9 - Capacity management, denominator-level capacity...Ch. 9 - Denominator-level problem. Thunder Bolt Inc., is a...Ch. 9 - Variable and absorption costing and breakeven...Ch. 9 - Variable costing versus absorption costing. The...Ch. 9 - Throughput Costing (continuation of 9-32) 1....Ch. 9 - Variable costing and absorption costing, the Z-Var...Ch. 9 - Comparison of variable costing and absorption...Ch. 9 - Effects of differing production levels on...Ch. 9 - Alternative denominator-level capacity concepts,...Ch. 9 - Motivational considerations in denominator-level...Ch. 9 - Denominator-level choices, changes in inventory...Ch. 9 - Variable and absorption costing and breakeven...Ch. 9 - Downward demand spiral. Market.com is about to...Ch. 9 - Absorption costing and production-volume...Ch. 9 - Operating income effects of denominator-level...Ch. 9 - Variable and absorption costing, actual costing....Ch. 9 - Prob. 9.45PCh. 9 - Cost allocation, responsibility accounting, ethics...Ch. 9 - Absorption, variable, and throughput costing....Ch. 9 - Costing methods and variances, comprehensive. Rob...
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