Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 4, Problem 1PA
Gwinnett County Chrome Company manufactures three chrome-plated products—automobile bumpers, valve covers, and wheels. These products are manufactured in two production departments (Stamping and Plating). The factory
The three products consume both machine hours and direct labor hours in the two production departments as follows:
Instructions
- 1. Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours.
- 2. Determine the product
factory overhead costs , using (a) the direct labor hour plantwide factory overhead rate and (b) the machine hour plantwide factory overhead rate.
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Hickory Company manufactures two products-14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide
overhead rate based on direct labour-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of
its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for
Products Y and Z:
Estimated
Overhead
Cost
Activity Cost Pool
Machining
Machine setups
Production design
General factory
Activity Measure
Machine-hours
Number of setups
Number of products
Direct labour-hours
$ 208,800
$ 108,00e
$ 84,000
$ 300,800
Expected Activity
18,000 MHS
200 setups
2 products
12,000 DLHS
Activity Measure
Machining
Number of setups
Number of products
Direct labour-hours
Product YProduct 2
7,000
50
3,000
150
8,800
4, 800
Requlred:
Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y?
Total manufacturing overhead cost
Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities—production setup, materials handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:
Activity
Cost
Activity Base
Production setup
$250,000
Number of setups
Material handling
150,000
Number of parts
General overhead
80,000
Number of direct labor hours
Each product's total activity in each of the three areas are as follows:
Product A
Product B
Number of setups
100
300
Number of parts
40,000
20,000
Number of direct labor hours
8,000
12,000
What is the activity rate for production setup?
a.$625 per setup
b.$2,500 per setup
c.$833 per setup
d.$400 per setup
Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities—production setup, materials handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:
Activity
Cost
Activity Base
Production setup
$250,000
Number of setups
Material handling
150,000
Number of parts
General overhead
80,000
Number of direct labor hours
Each product's total activity in each of the three areas are as follows:
Product A
Product B
Number of setups
100
300
Number of parts
40,000
20,000
Number of direct labor hours
8,000
12,000
What is the activity rate for materials handling?
Chapter 4 Solutions
Managerial Accounting
Ch. 4 - Why would management be concerned about the...Ch. 4 - Why would a manufacturing company with multiple...Ch. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - How does activity-based costing differ from the...Ch. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Under what circumstances might the activity-based...Ch. 4 - Prob. 9DQCh. 4 - Prob. 10DQ
Ch. 4 - Single plantwide factory overhead rate The total...Ch. 4 - Multiple production department factory overhead...Ch. 4 - Activity-based costing: factory overhead costs The...Ch. 4 - Activity-based costing: selling and administrative...Ch. 4 - Activity-based costing for a service business...Ch. 4 - Kennedy Appliance Inc.s Machining Department...Ch. 4 - Bach Instruments Inc. makes three musical...Ch. 4 - Scrumptious Snacks Inc. manufactures three types...Ch. 4 - Isaac Engines Inc. produces three productspistons,...Ch. 4 - Handy Leather, Inc., produces three sizes of...Ch. 4 - Eclipse Motor Company manufactures two types of...Ch. 4 - The management of Nova Industries Inc....Ch. 4 - Comfort Foods Inc. uses activity-based costing to...Ch. 4 - Nozama.com Inc. sells consumer electronics over...Ch. 4 - Hercules Inc. manufactures elliptical exercise...Ch. 4 - Lonsdale Inc. manufactures entry and dining room...Ch. 4 - Activity cost pools, activity rates, and product...Ch. 4 - Handbrain Inc. is considering a change to...Ch. 4 - Prob. 14ECh. 4 - Activity-based costing and product cost distortion...Ch. 4 - Prob. 16ECh. 4 - Evaluating selling and administrative cost...Ch. 4 - Prob. 18ECh. 4 - Prob. 19ECh. 4 - Activity-based costing for a service company...Ch. 4 - Bounce Back Insurance Company carries three major...Ch. 4 - Gwinnett County Chrome Company manufactures three...Ch. 4 - The management of Gwinnett County Chrome Company,...Ch. 4 - Activity-based and department rate product costing...Ch. 4 - Activity-based product costing Mello Manufacturing...Ch. 4 - Allocating selling and administrative expenses...Ch. 4 - Product costing and decision analysis for a...Ch. 4 - Single plantwide factory overhead rate Spotted Cow...Ch. 4 - Multiple production department factory overhead...Ch. 4 - Activity-based department rate product costing and...Ch. 4 - Activity-based product costing Sweet Sugar Company...Ch. 4 - Allocating selling and administrative expenses...Ch. 4 - Product costing and decision analysis for a...Ch. 4 - Life Force Fitness, Inc., assembles and sells...Ch. 4 - Prob. 2MADCh. 4 - Prob. 3MADCh. 4 - Production run size and activity improvement...Ch. 4 - Prob. 5MADCh. 4 - Ethics in Action The controller of Tri Con Global...Ch. 4 - Communication The controller of New Wave Sounds...Ch. 4 - Pelder Products Company manufactures two types of...Ch. 4 - The Chocolate Baker specializes in chocolate baked...Ch. 4 - Young Company is beginning operations and is...Ch. 4 - Cynthia Rogers, the cost accountant for Sanford...
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