Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 5, Problem 53P
a.
To determine
Calculate the given per unit costs.
b.
To determine
Calculate the given costs at the given output..
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months follow.
Month
Special Analyses
CustomerAccounts
PaychecksProcessed
AccountingService Costs
1
1
190
1,100
$
58,800
2
1
260
1,010
61,600
3
2
270
1,170
59,200
4
2
250
920
59,100
5
3
160
1,280
60,600
6
2
170
1,180
61,900
7
1
340
830
59,000
8
4
220
1,220
61,400
9
3
150
1,210
61,300
10
1
230
1,270
60,100
11
2
220
1,130
60,200
12
2
300
930
61,200
13
3
190
1,010
59,700
14
3
290
1,120
60,700
15
4
300
910
60,500
16
2
180
980
60,200
Totals
36
3,720
17,270
$
965,500
In addition to the above information, you learn that the accounting department had the following total…
The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months follow.
Month
Special Analyses
CustomerAccounts
PaychecksProcessed
AccountingService Costs
1
2
325
1,029
$
63,800
2
4
310
993
68,900
3
2
302
1,268
64,000
4
1
213
1,028
61,300
5
2
222
984
61,600
6
0
214
712
50,800
7
1
131
762
51,020
8
1
123
739
54,300
9
0
115
708
50,500
10
2
296
1,232
64,800
11
2
213
978
58,000
12
1
222
929
57,500
13
2
217
1,059
62,200
14
2
132
942
54,900
15
4
300
1,299
71,530
16
4
315
1,283
64,800
Totals
30
3,650
15,945
$
959,950
In…
The Westfield branch of Security Home Bank submitted the following cost data for last year:
Teller wages
Assistant branch manager salary
Branch manager salary
Total
Virtually all other costs of the branch-rent, depreciation, utilities, and so on-are organization-sustaining costs that cannot be
meaningfully assigned to individual customer transactions such as depositing checks.
In addition to the cost data above, the employees of the Westfield branch were interviewed concerning how their time was
distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below:
Teller wages
Assistant branch manager salary
Branch manager salary
$ 144,000
74,000
90,000
$ 308,000
Activity
Opening accounts
Processing deposits and withdrawals
Processing other customer transactions
Distribution of Resource Consumption Across Activities
Processing
Deposits and
Withdrawals
75%
15%
0%
Opening
Accounts
4%
15%
4%
Activity Cost Pool
Opening…
Chapter 5 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 5 - What are the common methods of cost estimation?Ch. 5 - Prob. 2RQCh. 5 - Under what conditions is the engineering estimates...Ch. 5 - If one wishes simply to prepare a cost estimate...Ch. 5 - When using cost estimation methods based on past...Ch. 5 - Prob. 6RQCh. 5 - What is the difference between R2 and adjusted R2?Ch. 5 - Why are accurate cost estimates important?Ch. 5 - What are three practical implementation problems...Ch. 5 - Why is it important to incorporate learning into...
Ch. 5 - What are some complications that can arise when...Ch. 5 - The following costs are labeled fixed or variable...Ch. 5 - Prob. 13CADQCh. 5 - When preparing cost estimates for account analysis...Ch. 5 - How can one compensate for the effects of price...Ch. 5 - Prob. 16CADQCh. 5 - Prob. 17CADQCh. 5 - A decision maker is interested in obtaining a cost...Ch. 5 - Consider the Business Application item Using...Ch. 5 - A friend comes to you with the following problem....Ch. 5 - After doing an account analysis and giving the...Ch. 5 - In doing cost analysis, you realize that there...Ch. 5 - Prob. 23CADQCh. 5 - Are learning curves likely to affect materials...Ch. 5 - McDonalds, the fast-food restaurant, is known for...Ch. 5 - Prob. 26CADQCh. 5 - A manager asks you for a cost estimate to open a...Ch. 5 - Prob. 28CADQCh. 5 - Methods of Estimating Costs: Engineering Estimates...Ch. 5 - Prob. 30ECh. 5 - Methods of Estimating Costs: Engineering Estimates...Ch. 5 - Prob. 32ECh. 5 - Methods of Estimating Costs: Account Analysis The...Ch. 5 - Methods of Estimating Costs: Account Analysis...Ch. 5 - Methods of Estimating Costs: High-Low, Ethical...Ch. 5 - Methods of Estimating Costs: High-Low Adriana...Ch. 5 - Methods of Estimating Costs: High-Low
Adriana...Ch. 5 - Prob. 38ECh. 5 - Adriana Corporation manufactures football...Ch. 5 - Methods of Estimating Costs: Simple...Ch. 5 - Prob. 41ECh. 5 - Methods of Estimating Costs: High-Low Davis Stores...Ch. 5 - Methods of Estimating Costs: Scattergraph Prepare...Ch. 5 - Prob. 44ECh. 5 - Interpretation of Regression Results: Multiple...Ch. 5 - Interpretation of Regression Results Brodie...Ch. 5 - Prob. 47ECh. 5 - Interpretation of Regression Results: Simple...Ch. 5 - Learning Curves Assume that General Dynamics,...Ch. 5 - Learning Curves Assume that Whee, Cheatham, and...Ch. 5 - Prob. 51ECh. 5 - Learning Curves (Appendix B) Refer to the example...Ch. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Regressions from Published Data Obtain 13 years of...Ch. 5 - Prob. 56PCh. 5 - High-Low Method, Scattcrgraph Cubicle Solutions...Ch. 5 - High-Low Method, Scattcrgraph Academy Products...Ch. 5 - High-Low, Scattergraph, Issues with Data
Wyoming...Ch. 5 - Interpretation of Regression Results: Simple...Ch. 5 - Interpretation of Regression Results: Simple...Ch. 5 - Interpretation of Regression Results: Multiple...Ch. 5 - Interpretation of Regression Results: Simple...Ch. 5 - Interpretation of Regression Results Brews 4 U is...Ch. 5 - Cost Estimation: Simple Regression The following...Ch. 5 - Prob. 68PCh. 5 - Methods of Cost Analysis: Account Analysis, Simple...Ch. 5 - Learning Curves (Appendix B) Refer to the example...Ch. 5 - Learning Curves (Appendix B) Krylon Company...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.arrow_forwardThayne Company has 30 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative time demanded by each activity: Required: Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity. For non-value-added activities, indicate why they are non-value-added.arrow_forwardConstruct and interpret a product profitability report, allocating selling and administrative expenses Naper Inc. manufactures power equipment. Naper has two primary productsgenerators and air compressors. The following report was prepared by the controller for Napers senior marketing management for the year ended December 31: The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the activity base and activity rate for each activity, as follows: The controller determined the following activity-base usage information about each product: Determine the activity cost of each product for sales order processing and post-sale customer service activities. Use the information in (A) to prepare a complete product profitability report dated for the year ended December 31. Compute the gross profit to sales and the operating income to sales percentages for each product. (Round to two decimal places.) Interpret the product profitability report. How should management respond to the report?arrow_forward
- Classify each of the following actions as either being associated with the financial accounting information system (FS) or the cost management information system (CMS): a. Determining the total compensation of the CEO of a public company b. Issuing a quarterly earnings report c. Determining the unit product cost using TDABC d. Calculating the number of units that must be sold to break even e. Preparing a required report for the SEC f. Preparing a sales budget g. Using cost and revenue information to decide whether to keep, or drop, a product line h. Preparing an annual statement of financial position that conforms to generally accepted accounting principles (GAAP) i. Using cost and revenue information to decide whether to invest in a new production system or not j. Reducing costs by improving the overall quality of a product k. Using a debt-equity ratio and liquidity ratios from a balance sheet to assess the likelihood of bankruptcy l. Using a public companys financial statements to decide whether or not to buy its stockarrow_forwardFinancial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. A. In the correct format, prepare the income statement using the following information: B. Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital. C. Prepare a short response to accompany the income statement that explains why uncontrollable costs are included in the income statement.arrow_forwardIndicate whether the statement describes reporting by the financial accounting function or the managerial accounting function of an organization. The users of the report are managers who need a daily summary of work done each shift. The report is a job cost sheet for jobs completed in a 24-hour period. The annual report is released each year on the companys website. The report is audited by the companys certified public accountant firm. The report is prepared every day because the customer service manager needs information about inventory ready to be shipped to customers.arrow_forward
- Using the information in the previous exercises about Marleys Manufacturing, determine the operating income for department B, assuming department A sold department B 1,000 units during the month and department A reduces the selling price to the market price.arrow_forwardConstruct and Interpret a Product Profitability Report, Allocating Selling and Administrative Expenses Naper Inc. manufactures power equipment. Naper has two primary products-generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31: Air Generators Compressors Total Revenue $1,431,000 $2,094,800 $3,525,800 Cost of goods sold 1,073,250 1,571,100 2,644,350 Gross profit $357,750 $523,700 $881,450 Selling and administrative expenses 189,650 Income from operations $691,800 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and…arrow_forwardA professional services firm has been analysing the cost of collecting management information by using its employees' hourly charge-out rates to estimate the costs of different activities. The firm has calculated that the following costs have been incurred during the last month: Staff completing timesheets Managers analysing costs incurred on assignments compared to fees agreed with clients Credit control team updating the receivables ledgers to write off bad debts 5,000 3,000 500 Using the information provided, what are the firm's direct data capture costs for the last month? - $500 $5,000 $8,000 $8,500arrow_forward
- At the end of the first month of opening your business, you calculate the actual operating costs of the business and the income you earned. You also notice and document the difference in what you budgeted for certain materials and labor against the actual amounts you spent on the same. For your statement of cost of goods sold, use the following data regarding the actual costs incurred by the business over the past month: Materials purchased: $20,000 Consumed 80% of the purchased materials Direct labor: $8,493.33 Overhead costs: $3,765 Note: Assume that the beginning materials and ending work in process are zero for the month. Use the following revenue and cost information for the income statement. Note that the revenue you use will depend on the pricing level options you chose in Milestone Two. Also, assume that after accounting for weekends and other holidays, there were 20 business days in the first month of operation. For example, if you chose a sales price of $20 per collar,…arrow_forwardClassifying Costs as Product or Period Costs Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan. Required: Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank. 1. Depreciation on salespersons’ cars. 2. Rent on equipment used in the factory. 3. Lubricants used for machine maintenance. 4. Salaries of personnel who work in the finished goods warehouse. 5. Soap and paper towels used by factory workers at the end of a shift. 6. Factory supervisors’ salaries. 7. Heat, water, and power consumed in the factory. 8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) 9.…arrow_forwardConstruct and interpret a product profitability report, allocating selling and administrative expenses Naper Inc. manufactures power equipment. Naper has two primary products—generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31: Line Item Description Generators Air Compressors Total Revenue $4,200,000 $3,000,000 $7,200,000 Cost of goods sold (2,940,000) (2,100,000) (5,040,000) Gross profit $1,260,000 $900,000 $2,160,000 Selling and administrative expenses (610,000) Operating income $1,550,000 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
What Is A Checking Account?; Author: The Smart Investor;https://www.youtube.com/watch?v=vGymt1Rauak;License: Standard Youtube License