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Weygandt, Managerial Accounting, 8e
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Homework: Chapter 4
ACC560002VA016-1208-001: Cost Accounting / Homework: Chapter 4
*Brief Exercise 4-7
Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2020.
Activity Cost Pools
Estimated
Overhead
Estimated Use of
Cost Drivers per Activity
Ordering and receiving
$117,750
15,700
orders
Food processing
425,150
55,000
machine hours
Packaging
1,944,560
436,000
labor hours
For 2020, the company had11,300orders and used49,700machine hours, and labor hours totaled491,000.
Calculate the overhead rates for each activity.(Round answers to 2 decimal places, e.g. 12.25.)
Overhead Rates
Ordering and receiving
$
per order
Food processing
$
per machine hour
Packaging
$
per labor hour
What is the total overhead applied?
Total overhead applied
$
ACC560002VA016-1208-001: Cost Accounting / Homework: Chapter 4
*Brief Exercise 4-12
Spin Cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead costs to the projects. The activities and related overhead costs are as follows: initial concept formation $52,400; design $462,000; and construction oversight $116,550. The cost drivers and estimated use are as follows.
Activities
Cost Drivers
Estimated Use of Cost
Drivers per Activity
Initial concept formation
Number of project changes
20
Design
Square feet
154,000
Construction oversight
Number of months
105
(a)Compute the predetermined overhead rate for each activity.
Overhead Rate
Initial concept formation
$
per project change
Design
$
per square foot
Construction oversight
$
Per month
(b)Classify each of these activities as unit-level, batch-level, product-level, or facility-level.
Activities
Level
Initial concept formation
Unit-levelFacility-levelBatch-levelProduct-level
Design
Unit-levelFacility-levelBatch-levelProduct-level
Construction oversight
Unit-levelFacility-levelBatch-levelProduct-level
*Exercise 4-1 (Video)
Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations.
Standard
Custom
Direct labor costs
$50,000
$100,000
Machine hours
1,500
1,200
Setup hours
90
360
Total estimated overhead costs are $297,000. Overhead cost allocated to the machining activity cost pool is $189,000, and $108,000is allocated to the machine setup activity cost pool.
Compute the overhead rate using the traditional (plantwide) approach.(Round answer to 2 decimal places, e.g. 12.25.)
Predetermined overhead rate
% of direct labor cost
Compute the overhead rates using the activity-based costing approach.
Machining
$
per machine hour
Machine setup
$
per setup hour
Determine the difference in allocation between the two approaches.
Traditional costing
Standard
$
Custom
$
Activity-based costing
Standard
$
Custom
$
*Exercise 4-14 a1-a2, b (Video)
Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year.
Commercial
Residential
Revenues
$316,250
$480,000
Direct materials costs
$30,000
$50,000
Direct labor costs
120,000
280,000
Overhead costs
86,250
236,250
175,000
505,000
Operating income (loss)
$80,000
$(25,000)
The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Here are the three activity cost pools and related information she developed:
Activity Cost Pools
Estimated Overhead
Cost Drivers
Scheduling and travel
$86,250
Hours of travel
Setup time
135,000
Number of setups
Supervision
40,000
Direct labor cost
Estimated Use of Cost Drivers per Product
Commercial
Residential
Scheduling and travel
750
500
Setup time
500
250
Compute the activity-based overhead rates for each of the three cost pools.(Round overhead rate for supervision to 2 decimal places, e.g. 0.38.)
Overhead Rates
Scheduling and travel
$
per dollar
Setup time
$
per setup
Supervision
$
per dollar
Determine the overhead cost assigned to each product line.
Commercial
Residential
Scheduling and travel
$
$
Setup time
$
$
Supervision
$
$
Total cost assigned
$
$
Compute the operating income for each product line, using the activity-based overhead rates.
Operating income (loss)
Commercial
$
Residential
$
Home | iCampus X WileyPLUS X + -> C edugen.wileyplus.com/edugen/Iti/main.uni Return to Blackboard WileyPLUS Weygandt, Managerial Accounting, Se Help | System Announcements CALCULATOR PRINTER V ASSIGNMENT RESOURCES Homework: Chapter 4 Brief Exercise 4-7 Brief Exercise 4-7 Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2020. Brief Exercise 4-12 Exercise 4-1 (Video) Estimated Activity Cost Pools Estimated Use of Overhead Exercise 4-14 al-a2, b Cost Drivers per Activity (Video) Ordering and receiving. $117,750 15,700 orders Food processing 425,150 55,000 machine hours Review Score Packaging 1,944,560 436,000 labor hours Review Results by Study Objective For 2020, the company had 11,300 orders and used 49,700 machine hours, and labor hours totaled 491,000. Calculate the overhead rates for each activity. (Round answers to 2 decimal places, e.g. 12.25.) Overhead Rates Ordering and receiving $ per order Food processing per machine hour Packaging per labor hour LINK TO TEXT What is the total overhead applied? Total overhead applied LINK TO TEXT Question Attempts: 0 of 3 used SAVE FOR LATER 9Type here to search O WHome | iCampus X WileyPLUS X + * -> C a edugen.wileyplus.com/edugen/Iti/main.uni Return to Blackboard WileyPLUS Weygandt, Managerial Accounting, Se Help | System Announcements CALCULATOR PRINTER VERSION BACK NEXT ASSIGNMENT RESOURCES Homework: Chapter 4 Exercise 4-1 (Video) Brief Exercise 4-7 Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants Brief Exercise 4-12 to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations. Exercise 4-1 (Video) Exercise 4-14 al-a2, b Standard Custom (Video) Direct labor costs $50,000 $100,000 Machine hours 1,500 1,200 Review Score Setup hours 90 360 Review Results by Study Objective Total estimated overhead costs are $297,000. Overhead cost allocated to the machining activity cost pool is $189,000, and $108,000 is allocated to the machine setup activity cost pool. Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rate % of direct labor cost LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Compute the overhead rates using the activity-based costing approach. Machining per machine hour Machine setup per setup hour LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Determine the difference in allocation between the two approaches. Traditional costing Standard Custom 8:44 PM Type here to search O W 10/22/2020Home | iCampus X WileyPLUS X + edugen.wileyplus.com/edugen/Iti/main.uni WileyPLUS Return to Blackboard Weygandt, Managerial Accounting, Se Help | System Announcements ASSIGNMENT RESOURCES CALCULATOR PRINTER VERSION BACK NEXT Homework: Chapter 4 Exercise 4-14 al-a2, b (Video) Brief Exercise 4-7 Brief Exercise 4-12 Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year. Exercise 4-1 (Video) Commercial Residential Revenues $316,250 $480,000 Direct materials costs $30,000 $50,000 Direct labor costs 120,000 Review Score 280,000 Review Results by Study Overhead costs 86,250 236,250 175,000 505,000 Objective Operating income (loss) $80,000 $(25,000) The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Here are the three activity cost pools and related information she developed: Estimated Activity Cost Pools Overhead Cost Drivers Scheduling and travel $86,250 Hours of travel Setup time 135,000 Number of setups Supervision 40,000 Direct labor cost Estimated Use of Cost Drivers per Product Commercial Residential Scheduling and travel 750 500 Setup time 500 250 Compute the activity-based overhead rates for each of the three cost pools. (Round overhead rate for supervision to 2 decimal places, e.g. 0.38.) Overhead Rates Scheduling and travel per dollar Setup time per setup Supervision per dollar 8:45 PM O 22 W 10/22/2020 Type here to search RiHome | iCampus x WileyPLUS X + * -> C edugen.wileyplus.com/edugen/Iti/main.uni Return to Blackboard WileyPLUS Weygandt, Managerial Accounting, Se Help | System Announcements %% of direct labor cost NEXT ASSIGNMENT RESOURCES Predetermined overhead rate CALCULATOR PRINTER VERSION BACK Homework: Chapter 4 Brief Exercise 4-7 LINK TO TEXT LINK TO TEXT Brief Exercise 4-12 VIDEO: SIMILAR EXERCISE Exercise 4-1 (Video) Exercise 4-14 al-a2, b (Video) Compute the overhead rates using the activity-based costing approach. Review Score Machining per machine hour Review Results by Study Objective Machine setup per setup hour LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Determine the difference in allocation between the two approaches. Traditional costing Standard Custom Activity-based costing Standard Custom LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER 8:44 PM Type here to search O W 10/22/2020Home | iCampus X WileyPLUS X + -> edugen.wileyplus.com/edugen/Iti/main.uni Return to Blackboard VileyPLUS Weygandt, Managerial Accounting, Se Help | System Announcements CALCULATOR PRINTER VERSION BACK NEXT IGNMENT RESOURCES mework: Chapter 4 Brief Exercise 4-12 Brief Exercise 4-7 Spin Cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead costs to the projects. The activities and related overhead costs are as Brief Exercise 4-12 follows: initial concept formation $52,400; design $462,000; and construction oversight $116,550. The cost drivers and estimated use are as follows. Exeruse 4-1 (Video) Exercise 4-14 a1-a2, b Activities Cost Drivers Estimated Use of Cost (Video) Drivers per Activity Initial concept formation Number of project changes 20 eview Score Design Square feet 154,000 eview Results by Study Construction oversight Number of months 105 bjective (a) Compute the predetermined overhead rate for each activity. Overhead Rate Initial concept formation $ per project change Design per square foot Construction oversight Per month (b) Classify each of these activities as unit-level, batch-level, product-level, or facility-level. Activities Level Initial concept formation Design Construction oversight LINK TO TEXT LINK TO TEXT Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER 8:43 PM W 10/22/2020 Type here to search O- C edugen.wileyplus.com/edugen/Iti/main.uni Return to Blackboard WileyPLUS Weygandt, Managerial Accounting, Se Help | System Announcements CALCULATOR PRINTER VER ASSIGNMENT RESOURCES Overhead Rates Homework: Chapter 4 Brief Exercise 4-7 Scheduling and travel $ per dollar Brief Exercise 4-12 Setup time per setup Exercise 4-1 (Video) Exercise 4-14 al-a2, b (Video) Supervision per dollar Review Score Review Results by Study LINK TO TEXT VIDEO: SIMILAR EXERCISE Objective Determine the overhead cost assigned to each product line. Commercial Residential Scheduling and travel Setup time Supervision Total cost assigned LINK TO TEXT VIDEO: SIMILAR EXERCISE Compute the operating income for each product line, using the activity-based overhead rates. Operating income (loss) Commercial Residential LINK TO TEXT VIDEO: SIMILAR EXERCISE 8:46 Type here to search O 22 W 10/22/20