Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear below.
| Activity Cost Pool | Activity Measure | Total Cost | Total Activity | ||
| Serving a party of diners | Number of parties served | $ | 15,680 | 5,600 | parties |
| Serving a diner | Number of diners served | $ | 112,640 | 12,800 | diners |
| Serving drinks | Number of drinks ordered | $ | 31,500 | 10,500 | drinks |
The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries.
Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served.
Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month (including organization-sustaining costs) was $180,000 and that 12,000 diners had been served. Therefore, the average cost per diner was $15.
Required:
1&2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following parties of dinners? (Round your intermediate calculations to 2 decimal places. Round your Total Cost final answers to 2 decimal places and your Average Cost final answers to 3 decimal places.)
| Total Cost | Average Cost | |||
| a. | A party of five diners who ordered four drinks in total. | ________ | _____ | per diner |
| b. | A party of three diners who do not order any drinks. | ________ | _____ | per diner |
| c. | A party of one diner who orders four drinks. | ________ | _____ | per diner |
In: Accounting
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear below.
| Activity Cost Pool | Activity Measure | Total Cost | Total Activity | ||
| Serving a party of diners | Number of parties served | $ | 20,880 | 5,800 | parties |
| Serving a diner | Number of diners served | $ | 105,780 | 12,900 | diners |
| Serving drinks | Number of drinks ordered | $ | 39,900 | 10,500 | drinks |
The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries.
Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served.
Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month (including organization-sustaining costs) was $180,000 and that 12,000 diners had been served. Therefore, the average cost per diner was $15.
Required:
1&2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following parties of diners? (Round your intermediate calculations to 2 decimal places. Round your Total Cost final answers to 2 decimal places and your Average Cost final answers to 3 decimal places.)
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In: Accounting
5). Which of the following best describes the relationship between supply curve and the marginal cost curve for the purely competitive firm in the short run?
a. The supply curve is the same as the marginal cost curve throughout its upward sloping part.
b. The marginal cost curve and supply curve are the same above the average total cost curve.
c. The supply curve is the same as the marginal cost curve above the average variable cost curve.
d. The marginal cost curve has nothing to do with supply curve.
6). Which of the following best explains the significance of the statement that for firms in a purely competitive market, price equals marginal cost?
a. This has no significance, because profits are maximized or losses minimized when a firm operates at the level at which mariginal cost is equal to marginal revenue.
b. It is of no significance because that equality can be obtained only by government manipulation of price.
c. This has great significance, because when price equals marginal cost, the allocation of resources is most efficient in producing that combination of goods that consumers prefer.
d. The equation has great significance, because at this point the firm is obtaining economic profits.
7.) Which of the following best states why in the short run a firm may decide to continue to produce, even with economic losses?
a. Price is greater than average variable cost but less tha average total cost.
b. Total revenue is greater than total variable cost but less than total cost.
c. All of the above are reasons for continuing production.
d. One of the above is incorrect.
e. Economic losses areless than fixed cost.
In: Economics
At its present level of output of 100 units, a perfectly competitive firm discovers that (i) its total fixed costs are $200 and (ii) its marginal cost is $7 and equal to average total cost. At an output level of 50 units, marginal cost is $4 and equal to average variable cost. The price of the commodity being produced is $6.
If the firm wishes to maximize total profits, what should the firm do?
A) increase output.
B) decrease output.
C) increase price.
D) continue to produce the current level of output.
In: Economics
In February, Windsor, Inc. started 13,000 units. Of those, they completed 10,700 units; 2,300 units still in process were 30% complete. Total costs for the month were $200,000.
How many equivalent units were in Windsor’s ending Work in Process Inventory? __
How many equivalent units will be used to calculate the cost per equivalent unit? ______
What is the average cost per equivalent unit for the month? __________________________
What is the total cost of units completed and transferred out? ______________________
What is the total cost assigned to the units still in ending inventory? __________________________
In: Accounting
Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 120.00 | $ | 87.00 | ||
| Direct materials per unit | $ | 63.30 | $ | 52.00 | ||
| Direct labor per unit | $ | 17.00 | $ | 10.00 | ||
| Direct labor-hours per unit | 1.7 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 22,000 | units | 76,000 | units | ||
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
| Estimated total manufacturing overhead | $ | 1,927,800 | ||
| Estimated total direct labor-hours | 113,400 | DLHs | ||
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
| Estimated Overhead Cost |
Expected Activity | |||||
| Activities and Activity Measures | Xtreme | Pathfinder | Total | |||
| Supporting direct labor (direct labor-hours) | $ | 703,080 | 37,400 | 76,000 | 113,400 | |
| Batch setups (setups) | 480,000 | 220 | 180 | 400 | ||
| Product sustaining (number of products) | 700,000 | 1 | 1 | 2 | ||
| Other | 44,720 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 1,927,800 | ||||
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
1)Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
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2)
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.)
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3)
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.)
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In: Accounting
Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 115.00 | $ | 85.00 | ||
| Direct materials per unit | $ | 63.90 | $ | 51.00 | ||
| Direct labor per unit | $ | 12.00 | $ | 10.00 | ||
| Direct labor-hours per unit | 1.2 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 28,000 | units | 75,000 | units | ||
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
| Estimated total manufacturing overhead | $ | 2,063,400 | ||
| Estimated total direct labor-hours | 108,600 | DLHs | ||
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
| Estimated Overhead Cost |
Expected Activity | |||||
| Activities and Activity Measures | Xtreme | Pathfinder | Total | |||
| Supporting direct labor (direct labor-hours) | $ | 673,320 | 33,600 | 75,000 | 108,600 | |
| Batch setups (setups) | 520,000 | 280 | 240 | 520 | ||
| Product sustaining (number of products) | 790,000 | 1 | 1 | 2 | ||
| Other | 80,080 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 2,063,400 | ||||
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
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Required 3
Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places.)
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In: Accounting
Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 120.00 | $ | 87.00 | ||
| Direct materials per unit | $ | 63.30 | $ | 52.00 | ||
| Direct labor per unit | $ | 17.00 | $ | 10.00 | ||
| Direct labor-hours per unit | 1.7 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 22,000 | units | 76,000 | units | ||
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
| Estimated total manufacturing overhead | $ | 1,927,800 | ||
| Estimated total direct labor-hours | 113,400 | DLHs | ||
| Estimated Overhead Cost |
Expected Activity | |||||
| Activities and Activity Measures | Xtreme | Pathfinder | Total | |||
| Supporting direct labor (direct labor-hours) | $ | 703,080 | 37,400 | 76,000 | 113,400 | |
| Batch setups (setups) | 480,000 | 220 | 180 | 400 | ||
| Product sustaining (number of products) | 700,000 | 1 | 1 | 2 | ||
| Other | 44,720 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 1,927,800 | ||||
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
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Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.)
|
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.)
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Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
In: Accounting
Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 125.00 | $ | 91.00 | ||
| Direct materials per unit | $ | 64.20 | $ | 55.00 | ||
| Direct labor per unit | $ | 16.00 | $ | 10.00 | ||
| Direct labor-hours per unit | 1.6 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 25,000 | units | 71,000 | units | ||
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
| Estimated total manufacturing overhead | $ | 2,331,000 | ||
| Estimated total direct labor-hours | 111,000 | DLHs | ||
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
| Estimated Overhead Cost |
Expected Activity | |||||
| Activities and Activity Measures | Xtreme | Pathfinder | Total | |||
| Supporting direct labor (direct labor-hours) | $ | 888,000 | 40,000 | 71,000 | 111,000 | |
| Batch setups (setups) | 583,000 | 310 | 220 | 530 | ||
| Product sustaining (number of products) | 780,000 | 1 | 1 | 2 | ||
| Other | 80,000 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 2,331,000 | ||||
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Complete this question by entering your answers in the tabs below.
Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
|
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.)
|
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.)
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In: Accounting
Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 115.00 | $ | 85.00 | ||
| Direct materials per unit | $ | 65.40 | $ | 53.00 | ||
| Direct labor per unit | $ | 16.00 | $ | 10.00 | ||
| Direct labor-hours per unit | 1.6 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 32,000 | units | 60,000 | units | ||
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
| Estimated total manufacturing overhead | $ | 1,779,200 | ||
| Estimated total direct labor-hours | 111,200 | DLHs | ||
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
| Estimated Overhead Cost |
Expected Activity | |||||
| Activities and Activity Measures | Xtreme | Pathfinder | Total | |||
| Supporting direct labor (direct labor-hours) | $ | 556,000 | 51,200 | 60,000 | 111,200 | |
| Batch setups (setups) | 770,000 | 430 | 340 | 770 | ||
| Product sustaining (number of products) | 400,000 | 1 | 1 | 2 | ||
| Other | 53,200 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 1,779,200 | ||||
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
req 1
Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
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req 2
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.)
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req 3
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places.)
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In: Accounting