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Managerial accounting please help with complete answer..thank you Pixel Studio, Inc., is a small company that creates computer-generated animations for films and television. Much of
Managerial accounting please help with complete answer..thank you
Pixel Studio, Inc., is a small company that creates computer-generated animations for films and television. Much of the companys work consists of short commercials for television, but the company also does realistic computer animations for special effects in movies. The young founders of the company have become increasingly concerned with the economics of the ness particularly since many competitors have sprung up recently in the local area. To help understand the company's cost structure an activity-based costing system has been designed. Three major activities are carried out in the company: animation concept, animation production, and contract administration. The animation concept activity is carried out at the contract proposal stage when the company bids on projects. This is an intensive activity individuals from all parts of the company creating story boards and prototype be shown to the prospective Once a project is accepted by the client, the animation goes into production and contract administration all of the work involved in animation production is done by the technical staff, whereas the administrative staff is largely responsible for contract administration. The activity cost pools and their activity measures are listed Activity Cost Pool Activity Measure Activity Rate Animation concept Number of proposals 4,940 per proposal Animation production Minutes of completed animation 7,410 per minute Contract administration Number of contracts 7,010 per contract These activity rates include all of the companys costs, except for the costs of idle capacity and organization-sus taining costs. There are no direct labor or direct materials costs Preliminary analysis using these activity rates has indicated that local commercial This highly Producers commercials may ask or four oompanies like Studio to bid, which in unusually low ratio rthermore, the animation sequences tend to be much shorter local commercials than for other three to bids. work since is billed at fairly rates according to the running time of the completed this that the from these projects tend to be average. Data concerning activity in the commercial market appear Activity Measure Number of proposal Minutes of animation Number of contracts Step by Step Solution
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