Question
Exercise 4-6 Santana Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin, plant. The following costs are budgeted for the first quarter's operations. Machine setup, indirect
Santana Corporation manufactures snowmobiles in its Blue Mountain, Wisconsin, plant. The following costs are budgeted for the first quarter's operations.
Machine setup, indirect materials$ 4,000Inspections16,000Tests4,000Insurance, plant110,000Engineering design140,000Depreciation, machinery520,000Machine setup, indirect labor20,000Property taxes29,000Oil, heating19,000Electricity, plant lighting21,000Engineering prototypes60,000Depreciation, plant210,000Electricity, machinery36,000Machine maintenance wages19,000
Classify the above costs of Santana Corporation into activity cost pools using the following: engineering, machinery, machine setup, quality control, factory utilities, maintenance.
Budgeted Costs
Activity Cost Pool
Machine setup, indirect materials $ 4,000
Inspections 16,000
Tests 4,000
Insurance, plant 110,000
Engineering design 140,000
Depreciation, machinery 520,000
Machine setup, indirect labor 20,000
Property taxes 29,000
Oil, heating 19,000
Electricity, plant lighting 21,000
Engineering prototypes 60,000
Depreciation, plant 210,000
Electricity, machinery 36,000
Machine maintenance wages 19,000
Classify the above costs of Santana Corporation into activity cost pools using the following: engineering, machinery, machine setup, quality control, factory utilities, maintenance.
Budgeted Costs Activity Cost Poo
Machine setup, indirect materials
Inspections
Tests
Insurance, plant
Engineering design
Machine Setup
Quality Control
Factory Utilities
Engineering
Depreciation, machinery
Machine setup, indirect labor
Property taxes
Oil, heating
Electricity, plant lighting
Machine maintenance wages
Identify a cost driver that may be used to assign each cost pool to each line of snowmobiles.
Budgeted Costs Cost Driver
Machine setup, indirect materials
Inspections
Tests
Insurance, plant
Engineering design
Depreciation, machinery
Machine setup, indirect labor
Property taxes
Oil, heating
Electricity, plant lighting
Engineering prototypes
Depreciation, plant
Electricity, machinery
Machine maintenance wages
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Fundamental Accounting Principles Volume II
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
16th Canadian edition
1259261433, 978-1260305838
