Activities Indirect activity budget Allocation base (cost driver) Materials handling $55,000 Based on number of parts Machine setup $32,000 Based on number of setups Assembling $9820 Based on number of parts Packaging $15,100 Based on number of finished units Watson's Computer Company expects to produce 2330 computers. Watson's Computer Company also expects to use 11,000 parts and have 10 setups. The allocation rate for materials handling will be (Round all answers to two decimal places.) Question 16 options: $5.00 $6.48 $8.40 $23.61
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Activities | Indirect activity budget |
Allocation base (cost driver) |
Materials handling | $55,000 | Based on number of parts |
Machine setup | $32,000 | Based on number of setups |
Assembling | $9820 | Based on number of parts |
Packaging | $15,100 | Based on number of finished units |
Watson's Computer Company expects to produce 2330 computers. Watson's Computer Company also expects to use 11,000 parts and have 10 setups.
The allocation rate for materials handling will be (Round all answers to two decimal places.)
Question 16 options:
|
$5.00
|
|
$6.48
|
|
$8.40
|
|
$23.61
|
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- Evans, Inc., has a unit-based costing system. Evanss Miami plant produces 10 different electronic products. The demand for each product is about the same. Although they differ in complexity, each product uses about the same labor time and materials. The plant has used direct labor hours for years to assign overhead to products. To help design engineers understand the assumed cost relationships, the Cost Accounting Department developed the following cost equation. (The equation describes the relationship between total manufacturing costs and direct labor hours; the equation is supported by a coefficient of determination of 60 percent.) Y=5,000,000+30X,whereX=directlaborhours The variable rate of 30 is broken down as follows: Because of competitive pressures, product engineering was given the charge to redesign products to reduce the total cost of manufacturing. Using the above cost relationships, product engineering adopted the strategy of redesigning to reduce direct labor content. As each design was completed, an engineering change order was cut, triggering a series of events such as design approval, vendor selection, bill of materials update, redrawing of schematic, test runs, changes in setup procedures, development of new inspection procedures, and so on. After one year of design changes, the normal volume of direct labor was reduced from 250,000 hours to 200,000 hours, with the same number of products being produced. Although each product differs in its labor content, the redesign efforts reduced the labor content for all products. On average, the labor content per unit of product dropped from 1.25 hours per unit to one hour per unit. Fixed overhead, however, increased from 5,000,000 to 6,600,000 per year. Suppose that a consultant was hired to explain the increase in fixed overhead costs. The consultants study revealed that the 30 per hour rate captured the unit-level variable costs; however, the cost behavior of other activities was quite different. 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What is the per-unit cost for each product under the traditional allocation method? B. What is the per-unit cost for each product under ABC costing?Compute It uses activity-based costing. Two of Compute It's production activities are kitting (assembling the raw materials needed for each computer in one kit) and boxing the completed products for shipment to customers. Assume that Compute It spends $960,000 per month on kitting and $32,000 per month on boxing. Compute It allocates the following: • Kitting costs based on the number of parts used in the computer • Boxing costs based on the cubic feet of space the computer requires Suppose Compute It estimates it will use 400,000 parts per month and ship products with a total volume of 6,400 cubic feet per month. Assume that each desktop computer requires 125 parts and has a volume of 2 cubic feet. The predetermined overhead allocation rate for kitting is $2.40 per part and the predetermined overhead allocation rate for boxing is $5.00 per cubic foot. What are the kitting and boxing costs assigned to one desktop computer? (Round all calculations to the nearest cent.) O A. O B. O C. O…
- Compute It uses activity-based costing. Two of Compute It's production activities are kitting (assembling the raw materials needed for each computer in one kit) and boxing the completed products for shipment to customers. Assume that Compute It spends $960,000 per month on kitting and $32,000 per month on boxing. Compute It allocates the following: • Kitting costs based on the number of parts used in the computer • Boxing costs based on the cubic feet of space the computer requires Suppose Compute It estimates it will use 400,000 parts per month and ship products with a total volume of 6,400 cubic feet per month. Assume that each desktop computer requires 125 parts and has a volume of 2 cubic feet. The predetermined overhead allocation rate for kitting is $2.40 per part and the predetermined overhead allocation rate for boxing is $5.00 per cubic foot. What are the kitting and boxing costs assigned to one desktop computer? (Round all calculations to the nearest cent.) O A. O B. O C. O…CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $22 per machine hour (mh) Assembly $12 per direct labor hour (dlh) Setup $40 per setup Inspecting $18 per inspection Production scheduling $8 per production order Purchasing $5 per purchase order The activity-base usage quantities and units produced for each product were as follows: Stationary Bicycle Treadmill Machine hours 1,680 1,070 Direct labor hours 243 131 Setups 45 20 Inspections 158 94 Production orders 60 32 Purchase orders 240 98 Units produced 500 350 Use the activity rate and usage information to compute the total activity…Keyboard uses activity-based costing. Two of Keyboard's production activities are kitting (assembling the raw materials needed for each computer in one kit) and boxing the completed products for shipment to customers. Assume that Keyboard spends $10,000,000per month on kitting and $18,000,000 per month on boxing.Keyboardallocates the following: •Kitting costs based on the number of parts used in the computer •Boxing costs based on the cubic feet of space the computer requires Suppose Keyboard estimates it will use 250,000,000 parts per month and ship products with a total volume of 22,500,000 cubic feet per month. Assume that each desktop computer requires 175 parts and has a volume of 7 cubic feet. The predetermined overhead allocation rate for kitting is $0.04 per part and the predetermined overhead allocation rate for boxing is $0.80 per cubic foot. What are the kitting and boxing costs assigned to one desktop computer?
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