Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 5.23E
ABC,
| Mathematical | Financial | |
| Annual production in units | 45,000 | 90,000 |
| Direct material costs | $180,000 | $360,000 |
| Direct manufacturing labor costs | $ 90,000 | $180,000 |
| Direct manufacturing labor-hours | 4,500 | 9,000 |
| Machine-hours | 30,000 | 60,000 |
| Number of production runs | 45 | 45 |
| Inspection hours | 1,200 | 600 |
Total manufacturing overhead costs are as follows:
| Total | |
| Machining costs | $360,000 |
| Setup costs | 108,000 |
| Inspection costs | 117,000 |
- 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.
Required
- 2. Compute the
manufacturing cost per unit for each product. - 3. How might Sander’s managers use the new cost information from its activity-based costing system to better manage its business?
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Students have asked these similar questions
2. Lalila Furnitures produces communicator table and coffee table and operates at capacity. Data related
to the two products are presented here:
Annual production in units
Direct material costs
Direct manufacturing labor costs
Direct manufacturing labor-hours
Machine-hours
Number of production runs
Inspection hours
Total manufacturing overhead costs are as follows:
RM
Machining costs
Setup costs
Inspection costs
Coffee table
50,000
150,000
50,000
2,500
25,000
50
1,000
375,000
120,000
105,000
Communicator table
100,000
300,000
100,000
5,000
50,000
50
500
a. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per
unit for each product.
b. Compute the manufacturing cost per unit for each product.
Kesterson Corporation has provided the following information:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Sales commissions
Variable administrative expense
Fixed selling and administrative expense
Cost per
Unit
$ 6.30
$ 3.30
$ 1.25
$ 1.30
$ 0.60
Cost per
Period
$ 15,000
$ 4,200
If 7,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
Required information
[The following information applies to the questions displayed below.]
Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has
the following seven activity cost pools:
Estimated
Overhead Cost
$ 26,800
Expected Activity
5,000 direct labor-hours
9,000 machine-hours.
1,100 setups
Activity Cost Pool
Labor-related
Machine-related
$ 4,500
Machine setups
$ 41,800
Production orders
$ 17,000
Product testing
$ 15,500
Packaging
$ 51,000
General factory
$ 52,400
5,000 direct labor-hours
500 orders
500 tests
3,400 packages
2. Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined
overhead rate based on direct labor-hours. (Round your answer to 2 decimal places.)
Predetermined overhead rate
per DLH
Chapter 5 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 5 - What is broad averaging, and what consequences can...Ch. 5 - Why should managers worry about product...Ch. 5 - What is costing system refinement? Describe three...Ch. 5 - What is an activity-based approach to designing a...Ch. 5 - Describe four levels of a cost hierarchy.Ch. 5 - Why is it important to classify costs into a cost...Ch. 5 - What are the key reasons for product cost...Ch. 5 - Prob. 5.8QCh. 5 - Department indirect-cost rates are never...Ch. 5 - Prob. 5.10Q
Ch. 5 - Prob. 5.11QCh. 5 - Prob. 5.12QCh. 5 - Activity-based costing is the wave of the present...Ch. 5 - Increasing the number of indirect-cost pools is...Ch. 5 - The controller of a retail company has just had a...Ch. 5 - Conroe Company is reviewing the data provided by...Ch. 5 - Prob. 5.17MCQCh. 5 - Cost hierarchy. Roberta, Inc., manufactures...Ch. 5 - ABC, cost hierarchy, service. (CMA, adapted)...Ch. 5 - Alternative allocation bases for a professional...Ch. 5 - Plant-wide, department, and ABC Indirect cost...Ch. 5 - Plant-wide, department, and activity-cost rates....Ch. 5 - ABC, process costing. Sander Company produces...Ch. 5 - Department costing, service company. DLN is an...Ch. 5 - Activity-based costing, service company....Ch. 5 - Activity-based costing, manufacturing. Decorative...Ch. 5 - ABC, retail product-line profitability. Fitzgerald...Ch. 5 - Prob. 5.28ECh. 5 - Activity-based costing. The job-costing system at...Ch. 5 - ABC, product costing at banks,...Ch. 5 - Problems 5-31 Job costing with single direct-cost...Ch. 5 - Job costing with multiple direct-cost categories,...Ch. 5 - Job costing with multiple direct-cost categories,...Ch. 5 - First-stage allocation, time-driven activity-based...Ch. 5 - First-stage allocation, time-driven activity-based...Ch. 5 - Department and activity-cost rates, service...Ch. 5 - Activity-based costing, merchandising. Pharmahelp,...Ch. 5 - Choosing cost drivers, activity-based costing,...Ch. 5 - ABC, health care. Crosstown Health Center runs two...Ch. 5 - Unused capacity, activity-based costing,...Ch. 5 - Unused capacity, activity-based costing,...Ch. 5 - ABC, implementation, ethics. (CMA, adapted) Plum...Ch. 5 - Activity-based costing, activity-based management,...
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