FUND.ACCT.PRIN.-CONNECT ACCESS
25th Edition
ISBN: 9781264217021
Author: Wild
Publisher: MCG
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Chapter C, Problem 1PSA
Problem C-1A Applying activity-based costing P1 P2 A1
Craftmore Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records.
Production Activity
Indirect labour
Indirect material
Other overhead
Grinding.............................
$320,000
Polishing............................ $13S,000
Product modification.................. 600,000
Providi ng power...................... $255,000
System calibration.................... 500,000
Additional information on the drivers for its production activities follows.
Grinding...................... 13,000 machine hours Providing power............ 17,000 direct labor hours
Polishing..................... 13,000 machine hours System calibration........... 400 batches
Product modification........... 1.500 engineering hours
Required
1. Compute the activity overhead rates using ABC. Form cost pools as appropriate.
2. Determine overhead costs to assign to the following jobs using ABC.
Number of units............. 2O0 units 2,500 Units
Machine hours.............. 550 MH 5,00 MH
Engineering hours........... 26 eng. hours 32 eng. hours
Batches ................... 30 batches 90 batches
Direct labor hours ........... 500 DLH 4.375 DLH
3. What is the overhead cost per unit for Job 3175? What is the overhead cost per unit for Job 4286? Check (3) Job 3175, $373.25 per unit
4. If the company used a plantwide overhead rate based on direct labor hours, what would be the overhead cost for each unit of Job 3175? for Job 4286?
5. Compare the overhead costs per unit computed in requirements 3 and 4 for each job.
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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…
TB MC Qu. 4-49 Boesenhofer, Inc., manufactures and sells...
Boesenhofer, Inc., manufactures and sells two products: Product N6 and Product N7. The company has an activity-based costing system with the following activity cost pools, activity measures, and
expected activity
Estimated
Expected Activity
Activity
Overhead
Activity Cost Pools
Measures
Cost
Product N6
Product N7
Labor-related
DLHS
Total
$345,060
128,534
107,598
2,100
600
4,100
Machine setups
5,000
800
3,800
setups
7,100
Order size
MHs
1,400
7,900
$581,192
The activity rate for the Machine Setups activity cost pool is closest to:
Multiple Cholce
$73.57 per setup
$91.81 per setup
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EXERCISE 5-15 Comprehensive Activity-Based Costing Exercise L05-2, L05-3, L05-4, L05-5
Advanced Products Corporation has supplied the following data from its activity-based
costing system:
Overhead Costs
Wages and salaries.
Other overhead costs.
Total overhead costs..
Activity Cost Pool
Supporting direct labor. ...
Order processing
Customer support.
Other
Wages and salaries. . . . . . .
Other overhead costs.....
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$300,000 on adol
100,000A #T
Activity Measure
Number of direct labor-hours
Number of customer orders
Number of customers
This is an organization-sustaining activity
Supporting
Direct
Labor
40%
30%
Order
Processing
$400,000
Distribution of Resource Consumption
Across Activities
3210
30%
10%
Customer
Support
20%
20%
Total Activity
for the Year
20,000 DLHs
400 orders
200 customers
Not applicable
Senasisch
Other
10%
40%
Total
100%
100%
Chapter C Solutions
FUND.ACCT.PRIN.-CONNECT ACCESS
Ch. C - Prob. 1QSCh. C - Computing plantwide overhead rates P1 Chan Company...Ch. C - Computing overhead rates under ABC P2 Refer to the...Ch. C - Prob. 4QSCh. C - Prob. 5QSCh. C - Prob. 6QSCh. C - Prob. 7QSCh. C - Prob. 8QSCh. C - Prob. 9QSCh. C - Prob. 10QS
Ch. C - Prob. 11QSCh. C - Prob. 1ECh. C - Prob. 2ECh. C - Prob. 3ECh. C - Prob. 4ECh. C - Prob. 5ECh. C - Exercise C-6 Activity-based costing P2 Northwest...Ch. C - Prob. 8ECh. C - Prob. 9ECh. C - Prob. 10ECh. C - Prob. 11ECh. C - Prob. 12ECh. C - Problem C-1A Applying activity-based costing P1 P2...Ch. C - Prob. 2PSACh. C - Prob. 3PSACh. C - Prob. 4PSACh. C - Prob. CSPCh. C - Prob. 1DQCh. C - Complete the following for a traditional two-stage...Ch. C - What is the difference between operating...Ch. C - What is activity-based costing? What is its goal?Ch. C - What is a cost object?
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