Question
In: Accounting
Bramble Visuals produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis...
Bramble Visuals produces Tablets and Books. Total overhead costs
traditionally have been allocated on the basis of direct labor
hours. After implementing activity-based costing, managers
determined the following cost pools and cost drivers. They also
decided that general costs should no longer be allocated to
products.
|
Activity Pool |
Department Costs |
Cost Driver |
||||
|---|---|---|---|---|---|---|
|
Binding |
$297,000 | Number of units | ||||
|
Printing |
955,500 | Machine hours | ||||
|
Product design |
234,000 | Change orders | ||||
|
General |
727,500 | None | ||||
|
Total overhead costs |
$2,214,000 | |||||
Other information is as follows:
|
Tablets |
Books |
||||
|---|---|---|---|---|---|
|
Units |
62,500 | 30,000 | |||
|
Direct materials cost per unit |
$3.00 | $10 | |||
|
Direct labor cost per unit |
$7.00 | $14.00 | |||
|
Direct labor hours |
30,000 | 19,200 | |||
|
Machine hours |
150,000 | 144,000 | |||
|
Change orders |
1,500 | 2,400 |
Bramble’s managers have gathered the following information about
selling and administrative costs.
|
Activity Pool |
Total Cost |
Cost Driver |
||
|---|---|---|---|---|
|
Shipping |
$300,000 | Pounds shipped | ||
|
Advertising |
187,500 | Number of mailings | ||
|
Commissions |
168,125 | Sales price | ||
|
Total selling and administrative costs |
$655,625 |
|
Tablets |
Books |
||||
|---|---|---|---|---|---|
|
Weight |
20,000 pounds | 40,000 pounds | |||
|
Advertising mailings |
25,000 | 100,000 | |||
|
Sales commission |
5% of sales price | 8.00% of sales price | |||
|
Selling price per unit |
$35 | $75 |
Calculate ABC rates. (Round answers to 2 decimal
places, e.g. 15.25.)
|
S&A Cost ABC rates |
|||
|---|---|---|---|
|
Shipping |
$enter a dollar amount per pound rounded to 2 decimal places /lb. | ||
|
Advertising |
$enter a dollar amount per mailing rounded to 2 decimal places /mailing |
|
Product Cost ABC rates |
|||
|---|---|---|---|
|
Tablets |
$enter a dollar amount per unit rounded to 2 decimal places per unit | ||
|
Books |
$enter a dollar amount per unit rounded to 2 decimal places per unit |
Solutions
Expert Solution
1. ABC rates
Departmental cost
| Activity | Cost Pool | / | Cost Driver | = | Activity rate |
| Binding | $297,000 | / | 92,500 units | = | $3.21 per unit |
| Printing | $955,500 | / | 294,000 machine hours | = | $3.25 per machine hour |
| Product design | $234,000 | / | 3,900 changes orders | = | $60.00 per change order |
S&A Cost ABC rate
| Activity | Cost Pool | / | Cost Driver | = | Activity rate |
| Shipping | $300,000 | / | 60,000 pounds | = | $5.00 per pound |
| Advertising | $187,500 | / | 125,000 mailings | = | $1.50 per mailing |
2. Product cost
| Particulars | Tablets | Books |
| Direct materials cost per unit | $3.00 | $10.00 |
| Direct Labor cost per unit | $7.00 | $14.00 |
| Overhead cost per unit | $12.45 | $23.61 |
| Total Unit product cost | $22.45 | $47.61 |
| x Units sales | 62,500 | 30,000 |
| Total Product cost | $1,403,125 | $1,428,300 |
Working Notes:
Allocation of overhead cost
Tablets
| Activity | Cost Driver | x | Activity rate | = | Overhead cost |
| Binding | 62,500 units | x | $3.21 per unit | = | $200,625 |
| Printing | 150,000 machine hours | x | $3.25 per machine hour | = | $487,500 |
| Product design | 1,500 change orders | x | $60.00 per change order | = | $90,000 |
| Total Overhead costs | = | $778,125 |
Overhead cost per unit = $778,125 / 62,500 units = $12.45 per unit
Books
| Activity | Cost Driver | x | Activity rate | = | Overhead cost |
| Binding | 30,000 units | x | $3.21 per unit | = | $96,300 |
| Printing | 1,000 machine hours | x | $3.25 per machine hour | = | $468,000 |
| Product design | 2,400 change orders | x | $60.00 per change order | = | $144,000 |
| Total Overhead costs | = | $708,300 |
Overhead cost per unit = $708,300 / 30,000 units = $23.61 per unit
All the best...
ekkarill92 answered 2 years agoRelated Solutions
Stockin Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis...
Stockin Company produces Tablets and Books. Total overhead costs
traditionally have been allocated on the basis of direct labor
hours. After implementing activity-based costing, managers
determined the following cost pools and cost drivers. They also
decided that general costs should no longer be
allocated to products.
Activity Pool
Department
Costs
Cost driver
Binding
$266,825.00
Number of units
Printing
800,084.25
Machine hours
Product design
175,104.00
Change orders
General
757,486.75
None
Total overhead costs
$1,999,500.00
Other information is as follows:
Tablets
Books...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:
Processing
$
5,945
Supervising
$
19,680
Other
$
11,300
Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute
product margins. Overhead costs have already been allocated to the
company's three activity cost pools--Processing, Supervising, and
Other. The costs in those activity cost pools appear below:
Processing
$
5,945
Supervising
$
19,680
Other
$
11,300
Processing costs are assigned to products using machine-hours
(MHs) and Supervising costs are assigned to products using the
number of batches. The costs in the Other activity cost pool are
not assigned to products. Activity data appear...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute
product margins. Overhead costs have already been allocated to the
company's three activity cost pools--Processing, Supervising, and
Other. The costs in those activity cost pools appear below:
Processing
$
5,170
Supervising
$
31,640
Other
$
11,900
Processing costs are assigned to products using machine-hours
(MHs) and Supervising costs are assigned to products using the
number of batches. The costs in the Other activity cost pool are
not assigned to products. Activity data appear...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute
product margins. Overhead costs have already been allocated to the
company's three activity cost pools--Processing, Supervising, and
Other. The costs in those activity cost pools appear below:
Processing
$
4,025
Supervising
$
30,420
Other
$
10,700
Processing costs are assigned to products using machine-hours
(MHs) and Supervising costs are assigned to products using the
number of batches. The costs in the Other activity cost pool are
not assigned to products. Activity data appear...
Hyundai Corporation uses activity-based costing to compute its product margins. Overhead costs have already been allocated...
Hyundai Corporation uses activity-based costing to compute its
product margins. Overhead costs have already been allocated to the
company's three activity cost pools--Machining, Order Filling, and
Other. The data related to those costs in the activity cost pools
appears below:
Machining
$
10,952
Order Filling
$
25,604
Other
$
7,100
Machining costs are assigned to products using machine-hours
(MHs) and Order Filling costs are assigned to products using the
number of orders. The costs in the Other activity cost pool...
4. Suppose Chipco produces memory chips for hand-held devices such as tablets and phones. Total costs...
4. Suppose Chipco produces memory chips for hand-held devices
such as tablets and phones. Total costs in the short-run can be
described with the following formula:
TC = 300 + 5Q + 0.1(Q2)
where Q is the number of chips produced per week and TC is the
total cost of chips.
a. With the above cost function in mind, make a table of Q, TC,
MC, AVC, and ATC at quantities 0, 10, 20, 30, 40, 50, 60, 70, 80,...
Horton Company uses a normal costing system. Factory overhead is allocated on the basis of labor...
Horton Company uses a normal costing system. Factory overhead is
allocated on the basis of labor hours. At the beginning of the
year, management estimated that the company would incur $1,050,000
of manufacturing overhead costs and use 70,000 labor hours. The
company recorded the following events during the month of
March.
(a) Purchased $800,000 of materials on account.
b) Used $600,000 of materials in production, of which $80,000
were used as indirect materials.
(c) Incurred $250,000 of direct labor costs...
1. Structural steels have traditionally been used in shipbuilding; however, with increasing fuel costs, it is...
1. Structural steels have traditionally been used in
shipbuilding; however, with
increasing fuel costs, it is desirable to find alternative lower
weight materials.
Some of the key properties required for shipbuilding materials
are high yield
strength, high corrosion resistance, and low cost. Discuss the
benefits and
disadvantages of aluminum alloys as a replacement for structural
steels in ships.
Hakara Company has been using direct labor costs as the basis for assigning overhead to its...
Hakara Company has been using direct labor costs as the basis
for assigning overhead to its many products. Under this allocation
system product A has been assigned overhead of $24.08 per unit
while product B has been assigned $11.37 per unit. Management feels
that an ABC system will provide a more accurate allocation of the
overhead costs and has collected the following cost pool and cost
driver information:
Cost Pools
Activity Costs
Cost
Driver
Driver
Consumption
Machine setup
$ 396,000...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- . Use the following information to calculate your company's expected return State Probability Return Boom 20%...
- You are considering the following two projects and can only take one. Your cost of capital...
- C++: Write a program that produces truth tables for the following compound propositions. Write the header...
- 1. What is the historical role of investment bankers ? Has this role changed ? Why...
- How were the original Internet requirements met through its design? What are the two main requirements...
- discuss crowdfunding on platforms: What features of the services incorporate virality? What are some of the...
- A textbook of mass 2.08 kg rests on a frictionless, horizontal surface. A cord attached to...
ADVERTISEMENT