Mountaineer Tents manufactures and sells heavy and light duty tents to various outdoor retailers. To better...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Mountaineer Tents manufactures and sells heavy and light duty tents to various outdoor retailers. To better estimate costs, the company recently adopted an activity-based costing (ABC) system. The company estimates it will incur $900,000 in manufacturing overhead costs in the upcoming year. Based on an intense study of their company, the following activities, allocation bases, and percentages of overhead costs were determined: Activity Purchasing Inspections Sales Allocation Base Number of purchase orders Number of inspections Number of sales orders The estimated number of activities for heavy and light duty tents is expected to be as follows: Heavy-duty Light-duty 5,000 4,000 3,000 1,000 800 400 Number of purchase orders Number of inspections Number of sales orders Required: A Proportion of Overhead Cost 55% 20% 25% Calculate the amount of overhead that should be allocated to each of the three activities. B Calculate the overhead rates for each of the three activities. C If a single sales order requires 10 purchase orders and 30 inspections to fill, how much overhead should be applied to the order? Problem 2: Activity-Based Costing Monrovia Bike Corporation manufactures two models of bicycles: the "Gully Runner" and the "Claim Jumper." In the past, Monrovia had been using a traditional overhead allocation system based on machine hours. Monrovia decided to switch to an activity-based costing system using two activity cost pools. Information related to the new costing system is as follows: Activity Automated assembly..... Parts management.. Estimated Overhead Cost Estimated Activity $189,000 $63,000 7,000 machine hours 100 part numbers The actual activity for the year for the two models of bicycles was as follows: Part Numbers Used 70 30 BEST Bicycles Produced Claim Jumper .... Gully Runner.. Required: Calculate the following amounts. Be sure to show all work below to be eligible for partial credit. Machine Hours Used 2,400 4,800 300 960 1. Under the new activity-based costing system (ABC), what amount of overhead cost would Monrovia assign to each Claim Jumper bicycle? 2. If Monrovia was still using its traditional system, how much overhead cost would have been assigned to each Gully Runner bicycle? Mountaineer Tents manufactures and sells heavy and light duty tents to various outdoor retailers. To better estimate costs, the company recently adopted an activity-based costing (ABC) system. The company estimates it will incur $900,000 in manufacturing overhead costs in the upcoming year. Based on an intense study of their company, the following activities, allocation bases, and percentages of overhead costs were determined: Activity Purchasing Inspections Sales Allocation Base Number of purchase orders Number of inspections Number of sales orders The estimated number of activities for heavy and light duty tents is expected to be as follows: Heavy-duty Light-duty 5,000 4,000 3,000 1,000 800 400 Number of purchase orders Number of inspections Number of sales orders Required: A Proportion of Overhead Cost 55% 20% 25% Calculate the amount of overhead that should be allocated to each of the three activities. B Calculate the overhead rates for each of the three activities. C If a single sales order requires 10 purchase orders and 30 inspections to fill, how much overhead should be applied to the order? Problem 2: Activity-Based Costing Monrovia Bike Corporation manufactures two models of bicycles: the "Gully Runner" and the "Claim Jumper." In the past, Monrovia had been using a traditional overhead allocation system based on machine hours. Monrovia decided to switch to an activity-based costing system using two activity cost pools. Information related to the new costing system is as follows: Activity Automated assembly..... Parts management.. Estimated Overhead Cost Estimated Activity $189,000 $63,000 7,000 machine hours 100 part numbers The actual activity for the year for the two models of bicycles was as follows: Part Numbers Used 70 30 BEST Bicycles Produced Claim Jumper .... Gully Runner.. Required: Calculate the following amounts. Be sure to show all work below to be eligible for partial credit. Machine Hours Used 2,400 4,800 300 960 1. Under the new activity-based costing system (ABC), what amount of overhead cost would Monrovia assign to each Claim Jumper bicycle? 2. If Monrovia was still using its traditional system, how much overhead cost would have been assigned to each Gully Runner bicycle?
Expert Answer:
Answer rating: 100% (QA)
A Calculation of overhead allocated to each activity Purchasing Total overhead cost 900000 55 495000 Overhead allocated per purchase order 495000 5000 ... View the full answer
Related Book For
Managerial Accounting A Focus on Ethical Decision Making
ISBN: 978-0324663853
5th edition
Authors: Steve Jackson, Roby Sawyers, Greg Jenkins
Posted Date:
Students also viewed these accounting questions
-
Multiple Choice Questions 1. Activity-based costing is a method of cost allocation that is useful for assigning ________ costs to products or services. a. Direct labor b. Direct material c....
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Ski Aus is a company that makes fashionable, high performance and expensive ski clothing (ski wear). Ski Aus has traditionally segmented the market by clothing type (e.g., ski pants, ski jackets,...
-
Why should the amalgam used in dental fillings have the same average coefficient of expansion as a tooth? What would occur if they were mismatched?
-
What is the pressure amplitude of a sound wave if the intensity level is 40 dB?
-
Explain why activity-based management systems are being adopted.
-
Shamsud Ltd. operates on a calendar-year basis. At the beginning of December 2016, the company had the following current liabilities on its books: Accounts payable ........... $85,000 Rent payable...
-
Jupiter weighs 1,898,000,000,000 tons. If 1.0 ton is equal to 2000. lbs and 2.5 lbs equals 1.0 Couric. How much does Jupiter weigh in Couric. a. First Determine how many significant figures are in...
-
1. Based on the facts presented in the case, how should the recruiter analyze the data? Hint: Can the recruiter obtain the information needed to make a decision by simply looking at the worksheet?...
-
this \( X Y Z \) stock price and dividend history are as follows: An investor buys three shares of \( X Y Z \) at the beginning of 2018 , buys another one shares at the beginning of 2019 , sells one...
-
Suppose there are two uncorrelated risky assets A and B. Asset A has volatility 15% and return 15%. Asset B has volatility 25% and return 25%. You are a mean-variance investor with risk-aversion...
-
Describe the procedure" an auditor adopts, to communicate the identified misstatements during audit procedure?
-
Simon Company's year - end balance sheets follow. At December 3 1 Current Year 1 Year Ago 2 Years Ago Assets Cash $ 3 5 , 2 6 7 $ 4 1 , 2 2 3 $ 4 4 , 6 9 4 Accounts receivable, net 1 0 5 , 3 1 1 7 3...
-
Dextor Ltd provided you with information regarding two of their property, plant and equipment ( PPE ) items: Machine X Machine Z Date of purchase 1 / 4 / 2 0 2 0 1 / 4 / 2 0 2 0 Cash purchase cost $...
-
1. To what extent is the government and by extension the tax payer obligated to pay for rebuilding these poor communities impacted by natural disasters? 2. Kind of extending on this question, to what...
-
Can you help me with the journal entries? "Spartan Cases, Inc." started a small manufacturing plant that fabricates Aluminum Cases. The manufacturing process starts by acquiring aluminum from raw...
-
Study the pictures/images below. Obviously these was focus on LT sociology, anthropology and poltical science. Try to do some analysis by finding clues that are synonymous with the main concepts....
-
Fitzpatrick and Ramamurthy MDs operate a general practitioner medical practice. The company is currently evaluating its operations to find areas where the company is incurring costs without creating...
-
Timmer Bachman founded the Bachman Corporation over 25 years ago. The companys genesis was the unique climbing apparatus developed by Timmer, an avid mountaineer. Bachman Corporation has continued to...
-
The University of Tennessee has asked for your help with implementing an activity-based costing system for the admissions office. The following activities and cost drivers were identified by the...
-
The Welding Department of Nagano Manufacturing Company has the following production and manufacturing cost data for February 2002. All materials are added at the beginning of the process. Nagano uses...
-
With the popularity of the Apple iPad, the tablet computer market is experiencing high growth rates and record demand levels. Using the Internet as a research tool, complete a five forces analysis...
-
The ledger of Grogan Company has the following work in process account. Production records show that there were 800 units in the beginning inventory, 30% complete, 1,100 units started, and 1,300...
Study smarter with the SolutionInn App