Question

In: Accounting

Activity-Based Environmental Cost Assignments Pinter Company had the following environmental activities and product information: 1. Environmental...

Activity-Based Environmental Cost Assignments

Pinter Company had the following environmental activities and product information:

1. Environmental activity costs

Activity Costs
Design products (to reduce pollution) $ 129,600     
Test for contamination 230,400     
Treat toxic waste 720,000     
Operate pollution control equipment 576,000     

2. Driver data

Solvent X Solvent Y
Design hours 2,900           2,500          
Testing hours 5,100           9,300          
Pounds of waste 600           17,400          
Machine hours 2,900           69,100          

3. Other production data

Solvent X Solvent Y
Nonenvironmental production costs $1,692,000      $4,068,000     
Units produced 360,000      360,000     

Required:

1. Calculate the activity rates that will be used to assign environmental costs to products.

Design products $ per design hour
Testing $ per test hour
Treating waste $ per pound of waste
Operating equipment $ per machine hour

2. Determine the unit environmental and unit costs of each product using ABC. If required, round your answers to the nearest cent.

Activities Solvent X Solvent Y
Unit environmental cost $ $
Unit cost $ $

3. What if the design costs increased to $219,600 and the cost of toxic waste decreased to $360,000? Assume that Solvent Y uses 5,000 out of 10,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 6,840 of 7,200 pounds of toxic waste. What is the new environmental cost for Solvent Y? If required, round your intermediate calculations and answer to the nearest cent.
$ per unit

Solutions

Expert Solution

1. Calculate the activity rates that will be used to assign environmental costs to products.

Design products $129600/5400 = 24 per design hour
Testing $230400/14400 = 16 per test hour
Treating waste $720000/18000 = 40 per pound of waste
Operating equipment $576000/72000 = 8 per machine hour

2. Determine the unit environmental and unit costs of each product using ABC. If required, round your answers to the nearest cent.

Activities Solvent X Solvent Y
Design products 69600 60000
Testing 81600 148800
Treating waste 24000 696000
Operating equipment 23200 552800
Total Cost 198400 1457600
Unit environmental cost 360000 360000
Unit cost 0.55 4.05

3. What if the design costs increased to $219,600 and the cost of toxic waste decreased to $360,000? Assume that Solvent Y uses 5,000 out of 10,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 6,840 of 7,200 pounds of toxic waste. What is the new environmental cost for Solvent Y? If required, round your intermediate calculations and answer to the nearest cent.

Activities Solvent Y
Design products 109800
Testing 148800
Treating waste 342000
Operating equipment 552800
Total Cost 1153400
Unit environmental cost 360000
Unit cost 3.20

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Pinter Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs...
Pinter Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs Design products (to reduce pollution) $ 72,000      Test for contamination 128,000      Treat toxic waste 400,000      Operate pollution control equipment 320,000      2. Driver data Solvent X Solvent Y Design hours 1,600           800           Testing hours 2,800           3,600           Pounds of waste 300           7,700           Machine hours 1,600           30,400           3. Other production data Solvent X Solvent Y Nonenvironmental production costs $1,344,000      $1,952,000      Units produced 160,000      160,000      Required: 1. Calculate...
Pinter Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs...
Pinter Company had the following environmental activities and product information: 1. Environmental activity costs Activity Costs Design products (to reduce pollution) $ 118,800      Test for contamination 211,200      Treat toxic waste 660,000      Operate pollution control equipment 528,000      2. Driver data Solvent X Solvent Y Design hours 2,600           4,000           Testing hours 4,700           12,900           Pounds of waste 500           21,500           Machine hours 2,600           85,400           3. Other production data Solvent X Solvent Y Nonenvironmental production costs $3,080,000      $6,028,000      Units produced 440,000      440,000      Required: 1. Calculate...
Company uses activity-based costing to determine product cost. The accounting department identified the following overhead activities,...
Company uses activity-based costing to determine product cost. The accounting department identified the following overhead activities, costs, and activity drivers for the coming year. Activity Estimated cost Activity driver Activity capacity Setting up equipment $120,000 Number of setups 300 Ordering materials 90,000 Number of orders 9,000 Maintaining machines 210,000 Machine hours 21,000 Total overhead $420,000 The following actual results were collected for the production of Model X and Model Y during the year. Model X Model Y Units produced 8,000...
1) Utilizing the activity-based costing system information provided below, select the correct product margin. Activity Cost...
1) Utilizing the activity-based costing system information provided below, select the correct product margin. Activity Cost Pool Total Cost Total Activity Assembly $900,000          6,000 machine-hours Processing orders $400,000            800 orders Inspection   $250,000            250 inspection-hours The company makes 2,000 units of Product XYZ a year, requiring a total of 500 machine-hours, 12 orders, and 20 inspection-hours per year. The product's direct materials cost is $150.00 per unit and its direct labor cost is $70.00 per unit. The product sells for $300.00...
1. Quiz Company uses activity-based costing to determine product cost. The accounting department identified the following...
1. Quiz Company uses activity-based costing to determine product cost. The accounting department identified the following overhead activities, costs, and activity drivers for the coming year. Activity Estimated cost Activity driver Activity capacity Setting up equipment $120,000 Number of setups 300 Ordering materials 90,000 Number of orders 9,000 Maintaining machines      210,000 Machine hours 21,000      Total overhead $420,000 The following actual results were collected for the production of Model X and Model Y during the year. Model X Model...
1) Extreme Manufacturing Company provides the following ABC costing​ information: Activities Total Costs Activity−cost drivers Account...
1) Extreme Manufacturing Company provides the following ABC costing​ information: Activities Total Costs Activity−cost drivers Account inquiry ​$320,000 ​16,000 hours Account billing ​$220,000 ​4,000,000 lines Account verification accounts ​$182,000 ​80,000 accounts Correspondence letters ​$25,000 ​4,000 letters Total costs ​$747,000 The above activities are used by Departments A and B as​ follows: Department A Department B Account inquiry hours ​2,200 hours ​3,700 hours Account billing lines ​600,000 lines ​450,000 lines Account verification accounts ​5,000 accounts ​3,000 accounts Correspondence letters ​1,000 letters...
a company provides the following abc costing information: activities total costs activity cost drivers labor 384000...
a company provides the following abc costing information: activities total costs activity cost drivers labor 384000 8000 hours gas 36000 6000 gallons invoices 180000 total costs 600000 the above activities used by their three departments are : department 1 department 2 department 3 labor 2500 hours 1400 hours 4100 hours gas 1800 gallons 1000 gallons 3200 gallons invoices 1300 invoices 300 invoices 5900 invoices how much of invoice cost will be assigned to department 2?
Activity-Based Costing and Product Cost Distortion Handbrain Inc. is considering a change to activity-based product costing....
Activity-Based Costing and Product Cost Distortion Handbrain Inc. is considering a change to activity-based product costing. The company produces two products, cell phones and tablet PCs, in a single production department. The production department is estimated to require 4,000 direct labor hours. The total indirect labor is budgeted to be $462,400. Time records from indirect labor employees revealed that they spent 40% of their time setting up production runs and 60% of their time supporting actual production. The following information...
Activity-Based Costing and Product Cost Distortion Handbrain Inc. is considering a change to activity-based product costing....
Activity-Based Costing and Product Cost Distortion Handbrain Inc. is considering a change to activity-based product costing. The company produces two products, cell phones and tablet PCs, in a single production department. The production department is estimated to require 4,000 direct labor hours. The total indirect labor is budgeted to be $462,400. Time records from indirect labor employees revealed that they spent 40% of their time setting up production runs and 60% of their time supporting actual production. The following information...
Activity-Based Costing and Product Cost Distortion Handbrain Inc. is considering a change to activity-based product costing....
Activity-Based Costing and Product Cost Distortion Handbrain Inc. is considering a change to activity-based product costing. The company produces two products, cell phones and tablet PCs, in a single production department. The production department is estimated to require 4,000 direct labor hours. The total indirect labor is budgeted to be $462,400. Time records from indirect labor employees revealed that they spent 40% of their time setting up production runs and 60% of their time supporting actual production. The following information...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT