Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assigning Resource Costs to Activities, Resource Drivers, Primary and Secondary Activities Bob Russo, cost accounting manager for emple Produtts, was asked to determine the costs

image text in transcribed
image text in transcribed
Assigning Resource Costs to Activities, Resource Drivers, Primary and Secondary Activities Bob Russo, cost accounting manager for emple Produtts, was asked to determine the costs of the activities performed within the company's Manufacturing Engineering Department, The department has the following activities: creating bills of materials (BOM), studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tools. The general ledger accounts reveal the following expenditures for Manufacturing Engineering Salaries $500,000 Equipment 100,000 Supplies 30,000 Total $630,000 The equipment is used for two activities: Improving processes and designing tools. The equipment's time is divided by two activities: 40 percent for improving processes and 60 percent for designing tools. The salaries are for nine engineers, one who earns $100,000 and eight who earn $50,000 each. The $100,000 engineer spends 40 percent of her time training employees in new processes and 60 percent of her time on improving processes. One engineer spends 100 percent of her time on designing tools, and another engineer spends 100 percent of his time on improving processes. The remaining six engineers spend equal time on all activities Supplies are consumed in the following proportions Creating BOM 10% Studying capabilities Improving processes 35 Training employees 20 Designing tools 30 Alter determining the costs of the engineering activities, Bob was then asked to describe how these costs would be assigned to jobs produced within the factory. (The company manufactures machine parts on a job-order basis.) Bob responded by indicating that creating BOMs and designing tools were the only primary activities. The remaining were secondary activities. Arter some analysis, Bob concluded that studying manufacturing capabilities was an activity that enabled the other four activities to be realized. He also noted that all of the employees being trained are manufacturing workers-employees who work directly on the products. The major manufacturing activities are cutting, drilling, lathing, welding, and assembly. The costs of these activities are assigned to the various products using hours of usage (grinding hours, drilling hours, etc.). Furthermore, tools were designed to enable the production of specific jobs. Finally, the process Improvement activity focused only on the five major manufacturing activities 5 Creating BOM 109 Studying capabilities 5 Improving processes 35 20 30 Training employees Designing tools After determining the costs of the engineering activities, Bob was then asked to describe how these costs would be assigned to jobs produced within the factory The company manufactures machine parts on a job-order basis.) Bob responded by Indicating that creating BOMs and designing tools were the only primary activities. The remaining were secondary activities. After some analysis, Bob concluded that studying manufacturing capabilities was an activity that enabled the other four activities to be realized. He also noted that all of the employees being trained are manufacturing workers-employees who work directly on the products. The major manufacturing activities are cutting, drilling, tathing, welding, and assembly. The costs of these activities are assigned to the various products using hours of usage (grinding hours, dealing hours, etc.). Furthermore, tools were designed to enable the production of specific jobs. Finally, the process Improvement activity focused only on the five major manufacturing activities Required: Using the resource drivers and direct tracing, calculate the costs of each manufacturing engineering activity. If required, round your answers to the nearest dollar. Activity Cost Creating BOM Studying capabilities Improving processes Training employees Designing tools

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Managerial Accounting

Authors: Stacey M. Whitecotton, Robert Libby, Fred Phillips

5th Edition

1265117896, 9781265117894

More Books

Students also viewed these Accounting questions

Question

Identify the major phases of the training and HRD process

Answered: 1 week ago