4.1 Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities: Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-productionsetup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costsand activity bases for these activities:ActivityProduction setupProcurementQuality controlMaterials managementTotalCustomStandardThe activity-base usage quantities for each product are as follows:PurchaseOrders1,000SetupsActivity Cost$ 70,000141,750162,000205,000$578,750350150Total5001,350a. Determine an activity rate for each activity.Production SetupActivity RatesActivity cost+ Activity baseActivity BaseNumber of setupsNumber of purchase orders (PO)Number of inspectionsNumber of components350Inspections2,0007002,700ProcurementComponents5504501,000Quality ControlUnit Volume1,0001,0002,000Materials Management Activity rate/setup/PO $/inspection $/componentb. Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit costs to the nearestcent.Setups TotalPurchase OrdersTotalInspections TotalComponents TotalTotal product costUnit volumeUnit costCustom$Standardd. The custom product will consume$$c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis ofdirect labor hours. Round your answer to the nearest cent.per unitmaterials management activities than will the standard product.

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Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities:

Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities:

Managerial Accounting

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Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 10E: Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in...

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Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: The activity-base usage quantities and units produced for each product were as follows: Use the activity rate and usage information to determine the total activity cost and activity cost per unit for each product.
Lacy, Inc., produces a subassembly used in the production of hydraulic cylinders. The subassemblies are produced in three departments: Plate Cutting, Rod Cutting, and Welding. Materials are added at the beginning of the process. Overhead is applied using the following drivers and activity rates: Other data for the Plate Cutting Department are as follows: Required: 1. Prepare a physical flow schedule. 2. Calculate equivalent units of production for: a. Direct materials b. Conversion costs 3. Calculate unit costs for: a. Direct materials b. Conversion costs c. Total manufacturing 4. Provide the following information: a. The total cost of units transferred out b. The journal entry for transferring costs from Plate Cutting to Welding c. The cost assigned to units in ending inventory
Patterson Company produces wafers for integrated circuits. Data for the most recent year are provided: aCalculated using number of dies as the single unit-level driver. bCalculated by multiplying the consumption ratio of each product by the cost of each activity. Required: 1. Using the five most expensive activities, calculate the overhead cost assigned to each product. Assume that the costs of the other activities are assigned in proportion to the cost of the five activities. 2. Calculate the error relative to the fully specified ABC product cost and comment on the outcome. 3. What if activities 1, 2, 5, and 8 each had a cost of 650,000 and the remaining activities had a cost of 50,000? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Comment on the implications for the approximately relevant approach.
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Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Plata produces two models of microwave ovens with the following activity demands: The companys normal activity is 21,000 machine hours. Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system: a. 230,000 b. 240,000 c. 280,000 d. 190,000
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Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining. Order Filing, and Other-based on resource consumption, Data to perform these allocations appear below: Overhead costs: Equipment depreciation Supervisory expense $ 30,000 $ 14,800 Distribution of Resource Consumption Across Activity Cost Pools: Equipment depreciation Supervisory expense Activity: Product W1 Product Me Total Machining Order Filling 0.50 0.50 In the second stage, Machining costs are assigned to products using machine-hours (Ms) and Order Filing costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Product W1 Product Me Total Activity Cost Pools MHS (Machining) 5,530 17,000 22,530 0.40 0.30 Show Transcribed Text 5,530 17,000 22,530 Orders (Order Filling)…
Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities—production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities:ActivityActivity CostActivity BaseProduction setup$ 44,000Number of setupsProcurement13,500Number of purchase orders (PO)Quality control97,500Number of inspectionsMaterials management84,000Number of componentsTotal$239,000The activity-base usage quantities for each product are as follows:SetupsPurchaseOrdersInspectionsComponentsUnit VolumeCustom2907601,2005002,000Standard1101403002002,000Total4009001,5007004,000a. Determine an activity rate for each activity. b. Assign activity costs to each product and determine the unit activity cost, c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is…
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