Question

In: Accounting

Ferris Corporation makes a single product—a fire-resistant commercial filing cabinet—that it sells to office furniture distributors....

Ferris Corporation makes a single product—a fire-resistant commercial filing cabinet—that it sells to office

furniture distributors. The company has a simple ABC system that it uses for internal decision making. The

company has two overhead departments whose costs are listed on the following page:

Manufacturing overhead .................................. $500,000

Selling and administrative overhead ................ 300,000

Total overhead costs ........................................ $800,000

The company’s ABC system has the following activity cost pools and activity measures:

Activity Cost Pool Activity Measure

Assembling units ..................... Number of units

Processing orders .................... Number of orders

Supporting customers ............. Number of customers

Other ........................................ Not applicable

Costs assigned to the “Other” activity cost pool have no activity measure; they consist of the costs of

unused capacity and organization-sustaining costs—neither of which are assigned to orders, customers, or

the product.

Ferris Corporation distributes the costs of manufacturing overhead and of selling and administrative

overhead to the activity cost pools based on employee interviews, the results of which are reported below:

Distribution of Resource Consumption Across Activity Cost Pools

Assembling units

Processing Orders

Supporting Customers

Other

Total

Manufacturing overhead

50%

35%

5%

10%

100%

Selling and administrative

10%

45%

25%

20%

100%

Total activity

1,000 units

250 orders

100 customers

Required:

1- Perform the first-stage allocation of overhead costs to the activity cost pools and find manufacturing overhead for Assembling units.

2-Compute activity rates for the activity cost pools and find the activity rate for processing orders

3-Compute activity rates for the activity cost pools and find the activity rate for supporting customers

4-Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Assembeling unit?

5-Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Processing orders?

Solutions

Expert Solution

TThank you...


Related Solutions

Ferris Corporation makes a single product—a fire-resistant commercial filing cabinet—that it sells to office furniture distributors....
Ferris Corporation makes a single product—a fire-resistant commercial filing cabinet—that it sells to office furniture distributors. The company has a simple ABC system that it uses for internal decision making. The company has two overhead departments whose costs are listed on the following page: Manufacturing overhead .................................. $500,000 Selling and administrative overhead ................ 300,000 Total overhead costs ........................................ $800,000 The company’s ABC system has the following activity cost pools and activity measures: Activity Cost Pool Activity Measure Assembling units ........................
Clario, S.A., a Peruvian corporation, manufactures furniture in Peru. It sells the furniture to independent distributors...
Clario, S.A., a Peruvian corporation, manufactures furniture in Peru. It sells the furniture to independent distributors in the United States. Because title to the furniture passes to the purchasers in the United States, Clario reports $2,000,000 in U.S.-source income. Clario has no employees or operations in the United States related to its furniture business. As a separate line of business, Clario buys and sells antique toys. Clario has a single employee operating a booth on weekends at a flea market...
Hiroole sells computer equipment and home office furniture. Currently the furniture product line takes up approximately...
Hiroole sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50 percent of the company’s retail floor space. The president of Hiroole is trying to decide whether the company should continue offering furniture or concentrate on computer equipment. Below is a product line income statement for the company. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 13 percent without affecting...
Practice Exercise 2 Foress sells computer equipment and home office furniture. Currently the furniture product line...
Practice Exercise 2 Foress sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50 percent of the company’s retail floor space. The president of Foress is trying to decide whether the company should continue offering furniture or concentrate on computer equipment. Below is a product line income statement for the company. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 14...
A company makes and sells a single product, the variable cost of the production is $3...
A company makes and sells a single product, the variable cost of the production is $3 per unit and variable cost of selling is $1 per unit, fixed cost totalled $600, and the selling price per unit was $6. The company budgeted to make and sell 3 000 units in the next year. Required Prepare a break even chart showing the expected amount of the output and sales required to break even.
The Southern Division of Barstol Company makes and sells a single product, which is a part...
The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 29,000 units and the variable cost of each unit is $24. Presently the Southern Division sells 26,000 units per year to outside customers at $35 per unit. The Northern Division of Barstol Company would like to buy 15,000 units a year from Southern to use in its production. There would be no savings in variable...
The Southern Division of Barstol Company makes and sells a single product, which is a part...
The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 29,000 units and the variable cost of each unit is $24. Presently the Southern Division sells 26,000 units per year to outside customers at $35 per unit. The Northern Division of Barstol Company would like to buy 15,000 units a year from Southern to use in its production. There would be no savings in variable...
Murphy Manufacturing Corporation makes and sells one product, cleverly named “Product X”. Product X normally sells...
Murphy Manufacturing Corporation makes and sells one product, cleverly named “Product X”. Product X normally sells for $100 per unit and is only sold in whole units! Production for April 2010 is expected to equal sales at a level of 32,000 units, which represents Murphy’s normal capacity. The company expects inventory levels to remain unchanged for the month. (Production equals sales). The following budget monthly estimates for manufacturing, selling and administrative expenses are available for normal capacity of 32,000 monthly...
Legalos Company makes and sells a single product. It takes seven pounds of direct materials to...
Legalos Company makes and sells a single product. It takes seven pounds of direct materials to produce one unit of this product. Budgeted production for the next three months is given below: Budgeted Units to be Produced February 18,500 units March 19,200 units April 14,300 units The company wants to maintain monthly ending inventories of direct materials that are equal to 54% of the following month's production needs. The cost of direct materials is $1.50 per pound. Calculate the total...
ABC Company makes and sells a single product. It requires 2.5 pounds of direct materials to...
ABC Company makes and sells a single product. It requires 2.5 pounds of direct materials to produce one unit of this product. Budgeted units to be produced for the next four months is given below: Budgeted Units to be Produced July 35,000 units August 31,000 units September 11,000 units October 34,000 units The company wants to maintain monthly ending inventories of direct materials equal to 36% of the next month's production needs. The cost of direct materials is $9 per...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT