Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its 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 $27 per machine hour $10 per direct labor hour $55 per setup $28 per inspection $11 per production order $8 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,011 Direct labor hours 152 Setups 14 Inspections 378 Production orders 15 Purchase orders Units produced Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent. Total Activity Cost Activity Cost Per Unit X X Fabrication Assembly Setup Inspecting Production scheduling Purchasing Elliptical Machines Treadmill 1,714 390 44 630 76 194 251 118 168 X X

Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its 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 $27 per machine hour $10 per direct labor hour $55 per setup $28 per inspection $11 per production order $8 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,011 Direct labor hours 152 Setups 14 Inspections 378 Production orders 15 Purchase orders Units produced Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product. If required, round the per unit answers to the nearest cent. Total Activity Cost Activity Cost Per Unit X X Fabrication Assembly Setup Inspecting Production scheduling Purchasing Elliptical Machines Treadmill 1,714 390 44 630 76 194 251 118 168 X X

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4BE: Activity-based costing: selling and administrative expenses Jungle Junior Company manufactures and...

See similar textbooks

Similar questions

Step Costs, Relevant Range Bellati Inc. produces large industrial machinery. Bellati has a machining department and a group of direct laborers called machinists. Each machinist can machine up to 500 units per year. Bellati also hires supervisors to develop machine specification plans and oversee production within the machining department. Given the planning and supervisory work, a supervisor can oversee, at most, three machinists. Bellatis accounting and production history shows the following relationships between number of units produced and the annual costs of supervision and materials handling (by machinists): Required: 1. Prepare a graph that illustrates the relationship between direct labor cost and number of units produced in the machining department. (Let cost of direct labor be the vertical axis and number of units be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 2. Prepare a graph that illustrates the relationship between the cost of supervision and the number of units produced. (Let cost of supervision be the vertical axis and number of units be the horizontal axis.) Would you classify this cost as a strictly variable cost, a fixed cost, or a step cost? 3. Suppose that the normal range of production is between 1,400 and 1,500 units and that the exact number of machinists is currently hired to support this level of activity. Further suppose that production for the next year is expected to increase by an additional 500 units. What is the increase in the cost of direct labor? Cost of supervision?
Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units of Simple and 146,100 of Removable, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: Â How much is the overhead allocated to each unit of Simple and Removable?
Use the following information for Brief Exercises 4-34 and 4-35: Sanjay Company manufactures a product in a factory that has two producing departments, Assembly and Painting, and two support departments, S1 and S2. The activity driver for S1 is square footage, and the activity driver for S2 is number of machine hours. The following data pertain to Sanjay: Brief Exercises 4-34 (Appendix 4B) Assigning Support Department Costs by Using the Direct Method Refer to the information for Sanjay Company above. Required: 1. Calculate the cost assignment ratios to be used under the direct method for Departments S1 and S2. (Note: Each support department will have two ratiosone for Assembly and the other for Painting.) 2. Allocate the support department costs to the producing departments by using the direct method.
Allocating selling and administrative expenses using activity-based costing Arctic Air Inc. manufactures cooling units for commercial buildings. The price and cost of goods sold for each unit are as follows: In addition, the company incurs selling and administrative expenses of 226,250. The company wishes to assign these costs to its three major customers, Gough Industries, Breen Inc., and The Martin Group. These expenses are related to three major nonmanufacturing activities: customer service, project bidding, and engineering support. The engineering support is in the form of engineering changes that are placed by the customer to change the design of a product. The budgeted activity costs and activity bases associated with these activities are: Activity-base usage and unit volume information for the three customers is as follows: Instructions 1. Determine the activity rates for each of the three nonmanufacturing activity pools. 2. Determine the activity costs allocated to the three customers, using the activity rates in (1). 3. Construct customer profitability reports for the three customers, dated for the year ended December 31, using the activity costs in (2). The reports should disclose the gross profit and operating income associated with each customer. 4. Provide recommendations to management, based on the profitability reports in (3).
Fisico Company produces exercise bikes. One of its plants produces two versions: a standard model and a deluxe model. The deluxe model has a wider and sturdier base and a variety of electronic gadgets to help the exerciser monitor heartbeat, calories burned, distance traveled, etc. At the beginning of the year, the following data were prepared for this plant: Additionally, the following overhead activity costs are reported: Required: 1. Calculate the cost per unit for each product using direct labor hours to assign all overhead costs. 2. Calculate activity rates and determine the overhead cost per unit. Compare these costs with those calculated using the unit-based method. Which cost is the most accurate? Explain.
Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Plata produces two models of microwave ovens with the following activity demands: The companys normal activity is 21,000 machine hours. Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system: a. 230,000 b. 240,000 c. 280,000 d. 190,000
Product Costs using Activity Rates Atlas Enterprises Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its 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 Assembly $8 per direct labor hour Setup $45 per setup Inspecting $23 per inspectiaon Production scheduling $9 per production order Purchasing $6 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 1,696 1,001 Direct labor hours 433 169 Setups 59 18 Inspections 636 382 Production orders 67 13 Purchase orders 180 110 Units produced 276 185 Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for each…
Product Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its 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 $31 per machine hour Assembly $8 per direct labor hour Setup $46 per setup Inspecting $20 per inspection Production scheduling $9 per production order Purchasing $6 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 2,012 1,187 Direct labor hours 407 159 Setups 42 13 Inspections 619 371 Production orders 71 14 Purchase orders 201 123 Units produced 258 173 Use the activity rate and usage information to determine the…
Product Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its 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 $30 per machine hour Assembly $35 per direct labor hour Setup $90 per setup Inspecting $20 per inspection Production scheduling $19 per production order Purchasing $5 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 600 400 Direct labor hours 190 223 Setups 30 30 Inspections 15 25 Production orders 40 30 Purchase orders 318 85 Units produced 500 320 Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product. Total…
Product costs using activity rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its 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 $32 per machine hour Assembly $34 per direct labor hour Setup $86 per setup Inspecting $24 per inspection Production scheduling $23 per production order Purchasing $14 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Elliptical Machines Treadmill Machine hours 650 450 Direct labor hours 192 257 Setups 37 37 Inspections 31 38 Production orders 30 20 Purchase orders 318 93 Units produced 530 420 This information has been collected in the Microsoft Excel Online…
Product costs using activity rates Body-Solid Inc. manufactures elliptical exercise machines and treadmills. The products are prouced in its 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 Fabrication Assembly Setup Inspecting Production scheduling Purchasing Activity Rate $22 per machine hour $13 per direct labor hour $46 per setup $22 per inspection $14 per production order $11 per purchase order The activity-base usage quantities and units produced for each product were as follows: Activity Base Machine hours Direct labor hours Setups Inspections Production orders Purchase orders Elliptical Machines 1,778 Elliptical machines Treadmill 431 $ 53 747 72 Treadmill 1,049 168 16 201 Units produced 303 Use the activity rate and usage information to determine the total activity cost and activity cost per unit…
Activity-Based Costing 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 $31 per machine hour (mh) Assembly $14 per direct labor hour (dlh) Setup $50 per setup Inspecting $28 per inspection Production scheduling $16 per production order Purchasing $8 per purchase order The activity-base usage quantities and units produced for each product were as follows: StationaryBicycle Treadmill Machine hours 1,880 890 Direct labor hours 390 120 Setups 30 20 Inspections 790 390 Production orders 80 10 Purchase orders 220 120 Units produced 1,000 1,000 Use the activity rate and usage information to…