Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 10, Problem 6E
The fixed overhead budgeted for Ranier Industries at an expected capacity of 500,000 units is $1,500,000. Variable costing is used internally, and the net income is adjusted to an absorption costing net income at year-end. Data collected over the last three years show the following:
Determine the adjustment each year to convert the variable costing income to absorption costing net income. Compute the absorption costing net income for each year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
TBBSBM764 Corporation's delivery department provides service for two operating departments of the company.
Variable costs of the TBBSBM764's delivery department are allocated based on the number of deliveries made to each department in
a given period.
TBBSBM764's delivery department's fixed costs are budgeted to be 25% of total costs and are allocated based on the peak period
needs of each operating department. Data for last year are given below:
Delivery Department:
Actual Fixed Costs
Actual Variable Costs
(ID#346818)
Total Budgeted Costs
$19,410
$40,590
$48,000
Peak period needs
Actual deliveries
Budgeted deliveries
Operating Dept 1
10,000 deliveries
8,958
8,000
Operating Dept 2
5,000 deliveries
3,452
4,000
Q.) What amount of the TBBSBM764's delivery department's actual costs should not be allocated to the operating departments?
A.) $
Prev
1 of 25
Next >
MacBook Air
The following budgeted profit statement has been prepared using absorption costing principles.A company manufactures and sells a single product which has the following cost and sellingprice structure:
P/unit
P/unit
Selling price
120
Direct material
22
Direct labour
36
Variable overhead
14
Fixed overhead
12
84
Profit per unit
36
The fixed overhead absorption rate is based on the normal capacity of 2,000 units per month.Assume that the same amount is spent each month on fixed overheads.Budgeted sales for next month are 2,200 units.You are required to calculate:a. The breakeven point, in sales units per month. b. The margin of safety for the next month.
A company estimates its manufacturing overhead will be $525,000 for the next year. What is the predetermined overhead rate given the following
independent allocation bases? When required, round your answers to nearest cent.
A. Budgeted direct labor hours: 42,000
per direct labor hour
B. Budgeted direct labor expense: $1,050,000
per direct labor dollar
C. Estimated machine hours: 70,000
per machine hour
Chapter 10 Solutions
Principles of Cost Accounting
Ch. 10 - What is the difference between absorption costing...Ch. 10 - Distinguish between product costs and period...Ch. 10 - What effect will applying variable costing have on...Ch. 10 - What are the advantages and disadvantages of using...Ch. 10 - Prob. 5QCh. 10 - What is the difference between gross margin and...Ch. 10 - Why are there objections to using absorption...Ch. 10 - What are common costs?Ch. 10 - How is a contribution margin determined, and why...Ch. 10 - What are considered direct costs in segment...
Ch. 10 - What is cost-volume-profit analysis?Ch. 10 - Prob. 12QCh. 10 - What steps are required in constructing a...Ch. 10 - What is the difference between the contribution...Ch. 10 - What impact does income tax have on the break-even...Ch. 10 - Define differential analysis, differential...Ch. 10 - Prob. 17QCh. 10 - Prob. 18QCh. 10 - What are distribution costs?Ch. 10 - What is the purpose of the analysis of...Ch. 10 - In cost analysis, what determines which costs...Ch. 10 - Yellowstone Fabricators uses a process cost system...Ch. 10 - Using the information presented in E10-1, prepare...Ch. 10 - The chief executive officer of Acadia, Inc....Ch. 10 - The following production data came from the...Ch. 10 - A company had income of 50,000, using variable...Ch. 10 - The fixed overhead budgeted for Ranier Industries...Ch. 10 - Columbia Products Inc. has two divisions, Salem...Ch. 10 - The sales price per unit is 13 for the Voyageur...Ch. 10 - Teton, Inc. sells its only product for 50 per...Ch. 10 - A new product is expected to have sales of...Ch. 10 - Augusta Industries manufactures and sells two...Ch. 10 - A company has sales of 1,000,000, variable costs...Ch. 10 - Prob. 13ECh. 10 - A company has prepared the following statistics...Ch. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Redwood Industries needs 20,000 units of a certain...Ch. 10 - Prob. 18ECh. 10 - Biscayne Industries has determined the cost of...Ch. 10 - Roosevelt Enterprises has determined the cost of...Ch. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Arctic Software Inc. has two product lines. The...Ch. 10 - Prob. 7PCh. 10 - The production of a new product required Zion...Ch. 10 - Grand Canyon Manufacturing Inc. produces and sells...Ch. 10 - Prob. 10PCh. 10 - Emerald Island Company is considering building a...Ch. 10 - Royale Aluminum desires an after-tax income of...Ch. 10 - Deuce Sporting Goods manufactures a high-end model...Ch. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 1MCCh. 10 - Denali Company manufactures household products...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.arrow_forwardNashler Company has the following budgeted variable costs per unit produced: Budgeted fixed overhead costs per month include supervision of 98,000, depreciation of 76,000, and other overhead of 245,000. Required: 1. Prepare a flexible budget for all costs of production for the following levels of production: 160,000 units, 170,000 units, and 175,000 units. 2. What is the per-unit total product cost for each of the production levels from Requirement 1? (Round each unit cost to the nearest cent.) 3. What if Nashler Companys cost of maintenance rose to 0.22 per unit? How would that affect the unit product costs calculated in Requirement 2?arrow_forwardAdam Corporation manufactures computer tables and has the following budgeted indirect manufacturing cost information for the next year: If Adam uses the step-down (sequential) method, beginning with the Maintenance Department, to allocate support department costs to production departments, the total overhead (rounded to the nearest dollar) for the Machining Department to allocate to its products would be: a. 407,500. b. 422,750. c. 442,053. d. 445,000.arrow_forward
- Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Refer to the information for Speedy Petes above. Assume that this information was used to construct the following formula for monthly delivery cost. TotalDeliveryCost=41,850+(12.00NumberofDeliveries) Required: Assume that 3,000 deliveries are budgeted for the following month of January. Use the total delivery cost formula for the following calculations: 1. Calculate total variable delivery cost for January. 2. Calculate total delivery cost for January.arrow_forwardPease Contractors is a local home remodeling company. In analyzing financial performance, the accountant compares actual results with a flexible budget. The standard direct labor rates used in the flexible budget are established each year at the time the annual plan is formulated and held constant for the entire year. The standard direct labor rates in effect for the current fiscal year and the standard hours allowed for the actual output of work for August are shown in the following schedule. Worker Classification Standard Direct Labor Rate per Hour Standard Direct Labor-Hours Allowed for Output Supervisor $ 50 1,800 Skilled 30 2,250 General 20 4,950 The actual direct labor-hours worked and the actual direct labor rates per hour experienced for the month of August were as follows. Worker Classification Actual Direct Labor Rate per Hour Actual Direct Labor-Hours Supervisor $ 54 2,112 Skilled 32 2,112 General 18 5,376 Required: Calculate the dollar…arrow_forwardThe cost formula for the maintenance department of Rambo Limited is $19,200 per month plus $7.50 per machine hour used by the production department. Required: a. Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used. b. Prepare an appropriate performance report for the maintenance department assuming that 7,100 machine hours would be used in the month of May and that the total actual maintenance cost incurred in May was $68,950. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the maintenance cost that would be budgeted for a month in which 6,600 machine hours are planned to be used. Maintenance costarrow_forward
- Eckert Company uses the absorption costing approach to cost-plus pricing to set prices for its products. The following information will be used for questions 11 and 12 Based on budgeted sales of 18,000 units next year, the unit product cost of a particular product is $60.40. The company's selling, general, and administrative expenses for this product are budgeted to be $370,800 in total for the year. The company has invested $260,00 in this product and expects a return on investment of 11%. The target selling price based on the absorption costing approach for this product would be closest to which of the following? $67.04. $82.59. O $110.76. $81.00.arrow_forwardHonesty Company prepared the following budgeted information for the coming year:Factory overhead costs P 720,000Direct material costs P1,440,000Units of production 120,0000 unitsMachine hours 400,000 hoursDirect labor costs P 960,000Direct labor hours 200,000 hoursREQUIRED:1. Determine the applied overhead rates under each of the following bases. Round offpercentages to one decimal point and rates to the nearest whole centavo.a. Direct materials costsb. Direct labor costsc. Units of productiond. Direct labor hourse. Machine hoursarrow_forwardUt Ultrasonic manufactures three ultrasound imaging systems: Avex, AvexII, and Mel. Overhead is allocated to each system based on standard direct material dollars in each system. The firm uses a flexible overhead budget to calculate the overhead rate for the coming year, where budgeted volume is based on expected (projected) direct material dollars. The following table summarizes operations for the year: Selling price Projected production (units) Standard direct labor per unit Standard direct materials per unit Actual units produced Total direct materials actually used Avex $7,800 1,200 $150 $2,600 1,400 $3,967,600 Avexl $10,700 650 $200 $3,300 530 $1,679,040 Mel $15,750 350 $420 $4,800 410 $2,027,040 Fixed manufacturing overhead was budgeted at $7.5 million, and variable overhead was budgeted at $0.30 per direct material dollar. In other words, each dollar spent on direct materials is expected to generate $0.30 of variable manufacturing overhead. Actual overhead incurred during the…arrow_forward
- Blossom Company is preparing its manufacturing overhead budget for 2020. Relevant data consist of the following. Units to be produced (by quarters): 10, 600, 12,400, 14,700, 16, 300. Direct labor: Time is 1.6 hours per unit. Variable overhead costs per direct labor hour: indirect materials$0.80; indirect labor$1.30; and maintenance$0.70. Fixed overhead costs per quarter: supervisory salaries$37,020; depreciation$19, 700; and maintenance$13,530. Prepare the manufacturing overhead budget for the year, showing quarterly data. (Round overhead rate to 2 decimal places, e.g. 1.25. List variable expenses before fixed expense.) BLOSSOM COMPANY Manufacturing Overhead Budget Quarter 1q, 2q, 3arrow_forwardSIS Technologies currently allocates insurance costs on the basis of direct labor hours. If the direct labor hours for departments A, B, and C are expected to be 3000, 9000, and 5000, respectively, this year, determine the allocation to each department based on an indirect cost budget of $34,000.arrow_forwardThe overhead costs for a company are presently $Xper month. The management team of the company, in cooperation with the employees, is ready to implement a comprehensive improvement program to reduce these costs. If you (a) consider an observation of actual overhead costs for one month analogous to an output unit, (b) estimate the overhead costs for the first month of program implementation to be 1.15Xdue to extra front-end effort, and (c) consider a 90% improvement curve applicable to the situation, what is your estimate of the percentage reduction in present overhead costs per month after 30 months of program implementation?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY