Question

In: Accounting

Define what a cost driver is and how are cost drivers used to allocate overhead costs...

Define what a cost driver is and how are cost drivers used to allocate overhead costs and give an example.

Solutions

Expert Solution


Related Solutions

we explored specifics of health care finance, including cost drivers. in a discussion, define cost driver...
we explored specifics of health care finance, including cost drivers. in a discussion, define cost driver and explain the characteristics of a good driver as opposed to a poor one
Criticize the traditional costing systems used to allocate manufacturing overhead to cost objects. Explain how did...
Criticize the traditional costing systems used to allocate manufacturing overhead to cost objects. Explain how did activity based costing overcome the shortcomings of the traditional costing system and support your discussion with numerical examples through comparing cost per unit under the two systems. Demonstrate the concept of EUP and its calculation under Weighted Average and FIFO method with an illustration. (Use imaginary figures of your own).    Prepare a format of the Contribution Income Statement with imaginary figures. Also use...
Criticize the traditional costing systems used to allocate manufacturing overhead to cost objects. Explain how did...
Criticize the traditional costing systems used to allocate manufacturing overhead to cost objects. Explain how did activity based costing overcome the shortcomings of the traditional costing system and support your discussion with numerical examples through comparing cost per unit under the two systems.                                                          
Lotus Ltd has identified the following overhead costs and cost drivers for next year Overhead Items...
Lotus Ltd has identified the following overhead costs and cost drivers for next year Overhead Items E ( cost) $ Setups cost 90,000 Ordering Cost 50,000 Maintenance cost 150,000 Power 30,000 Cost Driver E( actual transactions) Number of setups 400 Number of orders 4,000 Machine Hours 25,000 Kilowatt hours 75,000 The following is one of the jobs completed during the year Job 700 Job 701 Direct materials $1200 $600 Direct Labor $900 $400 Units completed 250 100 DLH 40 20...
Leo Company has identified the following overhead costs and cost drivers for next year: Overhead Item...
Leo Company has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs $1,152,000 Number of setups 4,800 Ordering costs 320,000 Number of orders 40,000 Maintenance 1,600,000 Machine-hours 64,000 Power 160,000 Kilowatt-hours 400,000 The following is one of the jobs completed during the year: Job 201 Direct materials $18,000 Direct labor $24,000 Units completed 750 Direct labor-hours 180 Number of setups 12 Number of orders 16 Machine-hours 360 Kilowatt-hours...
Chapter 19 2.) How is the predetermined overhead allocation rate used to allocate overhead? 4.) Why...
Chapter 19 2.) How is the predetermined overhead allocation rate used to allocate overhead? 4.) Why is using a single plantwide overhead allocation rate not always accurate? 6.) What is activity-based management? How is it different from activity-based costing? 8.) What are the four steps to developing an activity-based costing system? 10.) List two ways managers can use ABM to make decisions. 12.) Explain the difference between target price and target cost. 14.) What is a just in time management...
What are the drawbacks for a company who does not allocate overhead costs to its products?...
What are the drawbacks for a company who does not allocate overhead costs to its products? Why might a company do this and what other controls would they have to implement to insure optimal performance?
Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce...
Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Type of Textbook Activity (Cost) Cost Driver Deluxe Moderate Economy Machine maintenance ($360,000) Number of machine hours 300 900 1,200 Setups ($640,000) Number of setups 30 15 5 Packing ($168,000) Number of cartons 15 35 55 Photo development ($680,000) Number of pictures 4,500 2,500 1,500 Deluxe textbooks are made with the finest-quality paper, six-color printing, and...
5) A company has identified the following overhead costs and cost drivers for the coming year:...
5) A company has identified the following overhead costs and cost drivers for the coming year: Overhead Item Cost Driver Budgeted Cost Budgeted Activity Level Machine setup Number of setups $ 20,000 200 Inspection Number of inspections 130,000 6,500 Material handling Number of material moves 80,000 8,000 Engineering Engineering hours 50,000 1,000 Total $280,000 The following information was collected on three jobs that were completed during the year: Job 101 Job 102 Job 103 Direct materials $5,000 $12,000 $8,000 Direct...
Grass Inc. identified the following overhead activities, their respective costs, and their cost drivers to produce...
Grass Inc. identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of lawn mowerss Type of Mowers   Activity (Cost) Cost Driver Deluxe Moderate Economy   Machine maintenance ($545,600)   Number of machine hours 220 780 1,200   Setups ($416,000)   Number of setups 29 13 6   Quality control ($203,322)   Number of inspections 15 34 45   Rent ($408,100)   Number of square feet 420 180 110 The company produced the following number of lawn mowers during the prior...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT