Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter 7.A, Problem 1E
EXERCISE 7A-1 Time-Driven Activity-Based Costing LO7-6
Saratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in its Purchasing Department to better understand how Purchasing Department labor costs are consumed by individual jobs. To aid the study, the company provided the following data regarding its Purchasing Department and three of its many jobs:
Required:
- Calculate the cost per minute of the resource supplied in the Purchasing Department
- Calculate the time-driven activity rate for each of Saratoga’s three activities.
- Calculate the total purchasing labor costs assigned to Job X, Job Y, and Job Z.
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Time-Driven Activity-Based Costing
Saratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in its Purchasing Department to better understand how Purchasing Department labor costs are consumed by individual jobs. To aid the study, the company provided the following data regarding its Purchasing Department and three of its many jobs:
Required:
1. Calculate the cost per minute of the resource supplied in the Purchasing Department.
2. Calculate the time-driven activity rate for each of Saratoga’s three activities.
3. Calculate the total purchasing labor costs assigned to Job X, Job Y, and Job Z.
Problem 2
Milky Corporation has provided the following data from its activity-based costing accounting system:
Activity Cost Pools
Designing products
Setting up batches
Assembling products
Total Cost
P1,372,448
P33,300
P126,160
Total Activity
7,798 product design hours
740 batch set-ups
6,640 assembly hours
The activity rate for the "designing products" activity cost pool is
answer must be in nearest peso
A
The activity rate for the "setting up batches" activity cost pool is
answer should be in nearest peso
A
The activity rate for the "assembling products" activity cost pool is
answer must be in nearest peso
A
Computing and using activity-based costing overhead allocation rates
Koehler (see Exercise E19-15 and Exercise E19-16) makes handheld calculators in two models—basic and professional—and wants to further refine its costing system by allocating overhead using activity-based costing. The estimated $721,000 of manufacturing overhead has been divided into three primary activities: Materials Handling, Machine Setup, and Insertion of Parts. The following data have been compiled:
Requirement 1
Koehler expects to produce 200,000 basic models and 200,000 professional models. Compute the predetermined overhead allocation rates using activity-based costing. How much overhead is allocated to the basic model? To the professional model?
Requirement 2
Compare your answers for Exercise E19-15, Exercise E19-16, and Exercise E19-17. What conclusions can you draw?
Note: Short Exercise S19-15 and ES19-16 must be completed before attempting Short Exercise 519-17.
Chapter 7 Solutions
Managerial Accounting
Ch. 7.A - EXERCISE 7A-1 Time-Driven Activity-Based Costing...Ch. 7.A -
EXERCISE 7A-2 Time-Driven Activity-Based Costing...Ch. 7.A - EXERCISE 7A-3 Time-Driven Activity-Based Costing...Ch. 7.A - PROBLEM 7A-4 Time-Driven Activity-Based Costing LO...Ch. 7.A - PROBLEM 7A-5 Time-Driven Activity-Based Costing LO...Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - What are unit-level, batch-level, product-level,...Ch. 7 - What types of costs should not be assigned to...
Ch. 7 - What are the two stages off allocation in...Ch. 7 - Why is the first stage of the allocation process...Ch. 7 - When activity-based costing is used, why do...Ch. 7 - Prob. 9QCh. 7 - Why is the form of activity-based costing...Ch. 7 - The Excel worksheet form that appears below is to...Ch. 7 - Prob. 2AECh. 7 - The Excel worksheet form that appears below is to...Ch. 7 - Prob. 1F15Ch. 7 - Prob. 2F15Ch. 7 - Prob. 3F15Ch. 7 - Prob. 4F15Ch. 7 - Prob. 5F15Ch. 7 - Prob. 6F15Ch. 7 - Prob. 7F15Ch. 7 - Prob. 8F15Ch. 7 - Prob. 9F15Ch. 7 - Prob. 10F15Ch. 7 - Prob. 11F15Ch. 7 - Prob. 12F15Ch. 7 - Prob. 13F15Ch. 7 - Prob. 14F15Ch. 7 - Prob. 15F15Ch. 7 - Prob. 1ECh. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - EXERCISE 7-7 First-Stage Allocations LO7-2
The...Ch. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - EXERCISE 7-13 Computing ABC Product Costs LO7-3,...Ch. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 -
PROBLEM 7-20 Evaluating the Profitability of...
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