Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 6, Problem 8EB
Rocks Industries has identified three different activities as cost drivers: machine setups, machine hours, and inspections. The
Compute the overhead rate for each activity.
Expert Solution & Answer
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Check out a sample textbook solutionStudents have asked these similar questions
Overhead costs are assigned to each product based on ________.
Group of answer choices
A. the proportion of that product’s use of the cost driver
B. a predetermined overhead rate for a single cost driver
C. price of the product
D. machine hours per product
Overhead costs are assigned to each product based on ________.A. the proportion of that product’s use of the cost driverB. a predetermined overhead rate for a single cost driverC. price of the productD. machine hours per product
The overhead absorption rate used to allocate manufacturing overhead is calculated by:
Select one:
a.
dividing the total actual manufacturing overhead costs by the total estimated quantity of the cost driver
b.
dividing the total estimated quantity of the cost driver by the total estimated manufacturing overhead costs
c.
dividing the total estimated manufacturing overhead costs by the total estimated quantity of the allocation base
d.
dividing the total estimated manufacturing overhead by the total actual quantity of the cost driver
The predetermined manufacturing overhead rate is usually computed:
Select one:
A.
At the end of the financial year
B.
At the beginning of the financial year
C.
During the financial year
D.
When overheads have been incurred
Chapter 6 Solutions
Principles of Accounting Volume 2
Ch. 6 - Active Frame, Inc., manufactures clear and tinted...Ch. 6 - TyeDye Lights makes two products: Party and...Ch. 6 - Which is not a step in analyzing the cost driver...Ch. 6 - Overhead costs are assigned to each product based...Ch. 6 - Which of the following is a reason a company would...Ch. 6 - Which is the correct formula for computing the...Ch. 6 - A company anticipates the cost to heat the...Ch. 6 - A company calculated the predetermined overhead...Ch. 6 - Which is not a step In activity-based costing? A....Ch. 6 - What is the proper order of tasks In an ABC...
Ch. 6 - Which is not a task typically associated with ABC...Ch. 6 - Which statement is correct? A. Activity-based cost...Ch. 6 - Activity-based costing systems: A. use a single...Ch. 6 - Activity-based costing is preferable in a system:...Ch. 6 - Absorption costing is also referred to as: A....Ch. 6 - Under variable costing, a unit of product includes...Ch. 6 - Under absorption costing, a unit of product...Ch. 6 - A downside to absorption casting is: not including...Ch. 6 - When the number of units in ending inventory...Ch. 6 - Product costs under variable costing are...Ch. 6 - What is the predetermined overhead rate, and when...Ch. 6 - When is an activity-based costing system better...Ch. 6 - What is the advantage of labeling activities as...Ch. 6 - What conditions are necessary to designate an...Ch. 6 - For each cost pool, identify an appropriate cost...Ch. 6 - How is the primary focus of activity-based costing...Ch. 6 - What are the primary differences between...Ch. 6 - How are service companies similar or different...Ch. 6 - How are costs allocated in an ABC system?Ch. 6 - In production, what has changed to allow ABC...Ch. 6 - Why is it important to know the true cost for a...Ch. 6 - What is the primary difference between variable...Ch. 6 - Why would managers prefer variable costing over...Ch. 6 - Why is absorption costing the method allowable for...Ch. 6 - Can a company gather information for both variable...Ch. 6 - Steeler Towel Company estimates its overhead to be...Ch. 6 - Crystal Pools estimates overhead will utilize...Ch. 6 - A company estimated 100,000 direct labor hours and...Ch. 6 - Cozy, Inc., manufactures small and large blankets....Ch. 6 - Identify appropriate cost drivers for these cost...Ch. 6 - Match the activity with the most appropriate cost...Ch. 6 - Rex Industries has two products. They manufactured...Ch. 6 - Rex Industries has identified three different...Ch. 6 - Customs makes two types of hats: polyester (poly)...Ch. 6 - Customs has three cost pools and an associated...Ch. 6 - Potterii sells its products to large box stores...Ch. 6 - Assign each of the following expenses to either...Ch. 6 - Tri-bikes manufactures two different levels of...Ch. 6 - Cool Pool has these costs associated with...Ch. 6 - Using this information from Planters. Inc., what...Ch. 6 - Green Bay Cheese Company estimates its overhead to...Ch. 6 - Boarders estimates overhead will utilize 160,000...Ch. 6 - A company estimated 50,000 direct labor hours and...Ch. 6 - Cozy, Inc., manufactures small and large blankets....Ch. 6 - Identify appropriate cost drivers for these cost...Ch. 6 - Match the activity with the most appropriate cost...Ch. 6 - Rocks Industries has two products. They...Ch. 6 - Rocks Industries has identified three different...Ch. 6 - Frenchys makes two types of scarves: polyester...Ch. 6 - Frenchys has three cost pools and an associated...Ch. 6 - Carboni recently added a carbon line in addition...Ch. 6 - Assign each of the following expenses to either...Ch. 6 - Stacks manufactures two different levels of hockey...Ch. 6 - Crafts 4 All has these costs associated with...Ch. 6 - Using this information from Outdoor Grills, what...Ch. 6 - Colonels uses a traditional cost system and...Ch. 6 - Five Card Draw manufactures and sells 24,000 units...Ch. 6 - A local picnic table manufacturer has budgeted...Ch. 6 - Explain how each activity in this list can be...Ch. 6 - Medical Tape makes two products: Generic and...Ch. 6 - Box Springs, Inc., makes two sizes of box springs:...Ch. 6 - Please use the information from this problem for...Ch. 6 - A company has traditionally allocated its overhead...Ch. 6 - Carltons Kitchens makes two types of pasta makers:...Ch. 6 - Carltons Kitchens three cost pools and overhead...Ch. 6 - Lampierre makes brass and gold frames. The company...Ch. 6 - Portable Seats makes two chairs: folding and...Ch. 6 - Grainger Company produces only one product and...Ch. 6 - Summarized data for Walrus Co. for its first year...Ch. 6 - Happy Trails has this information for its...Ch. 6 - Appliance Apps has the following costs associated...Ch. 6 - This information was collected for the first year...Ch. 6 - Bobcat uses a traditional cost system and...Ch. 6 - Five Card Draw manufactures and sells 10,000 units...Ch. 6 - A local picnic table manufacturer has budgeted the...Ch. 6 - Explain how each activity in this list can be...Ch. 6 - Wrappers Tape makes two products: Simple and...Ch. 6 - Box Springs. Inc., makes two sizes of box springs:...Ch. 6 - Please use the information from this problem for...Ch. 6 - A company has traditionally allocated its overhead...Ch. 6 - Caseys Kitchens makes two types of food smokers:...Ch. 6 - Caseys Kitchens three cost pools and overhead...Ch. 6 - Lampierre makes silver and gold candlesticks. The...Ch. 6 - Portable Seats makes two chairs: folding and...Ch. 6 - Submarine Company produces only one product and...Ch. 6 - Summarized data for Backdraft Co. for its first...Ch. 6 - Trail Outfitters has this information for its...Ch. 6 - Wifi Apps has these costs associated with its...Ch. 6 - This information was collected for the first year...Ch. 6 - What conditions are optimal for using traditional...Ch. 6 - College Cases sells cases for electronic devices...Ch. 6 - How would a service industry apply activity-based...Ch. 6 - Cape Cod Adventures makes foam noodles with sales...Ch. 6 - In designing a bonus structure to reward your...
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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
- Customs has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?arrow_forwardFrenchys has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?arrow_forwardWhich is the correct formula for computing the overhead rate? A. estimated use of the cost driver for production/estimated overhead for the activity B. estimated overhead for the product/estimated use of the cost driver for the activity C. estimated use of the cost driver for production/estimated overhead for the activity D. estimated overhead for the activity/estimated use of the cost driver for the activityarrow_forward
- Overhead costs are assigned to each product based on __________________. A. the proportion of that products use of the cost driver B. a predetermined overhead rate for a single cost driver C. price of the product D. machine hours per productarrow_forwardCarltons Kitchens three cost pools and overhead estimates are as follows: Compare the overhead allocation using: A. The traditional allocation method B. The activity-based costing method (Hint: the traditional method uses machine hours as the allocation base.)arrow_forwardWhat is the proper order of tasks In an ABC system? identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the productsarrow_forward
- Freeman Furnishings has summarized its data as shown: Compute the cost of goods manufactured, assuming that the overhead is allocated based on direct labor hoursarrow_forwardWhich of the following is the step in which materials, labor, and overhead are detailed? A. determining the units to which costs are assigned B. determining the equivalent units of production C. determining the cost per equivalent units D. allocating the costs to the units transferred out and the units partially completedarrow_forwardFreeman Furnishings has summarized its data as shown. Direct labor hours will be used as the activity base to allocate overhead: Compute the cost of goods manufactured.arrow_forward
- Assuming that all materials are added at the beginning of the process and that labor and factory overhead are applied evenly during the process, compute the figures to be inserted in the blank spaces of the following data, using the weighted average cost method. [Hint: for best success in solving each Case, solve them in numerical order starting with (1)]arrow_forwardThe activity base for service industries is most likely to be _________________. A. machine hours B. administrative salaries C. direct labor cost D. direct labor hoursarrow_forwardThe following items are associated with a traditional cost accounting information system, an activity-based cost accounting information system, or both (that is, some elements are common to the two systems): a. Usage of direct materials b. Direct materials cost assigned to products using direct tracing c. Direct labor cost incurrence d. Direct labor cost assigned to products using direct tracing e. Setup cost incurrence f. Setup cost assigned using number of setups as the activity driver g. Setup cost assigned using direct labor hours as the activity driver h. Cost accounting personnel i. Submission of a bid, using product cost plus 25 percent j. Purchasing cost incurrence k. Purchasing cost assigned to products using direct labor hours as the activity driver l. Purchasing cost assigned to products using number of orders as the activity driver m. Materials handling cost incurrence n. Materials handling cost assigned using the number of moves as the activity driver o. Materials handling cost assigned using direct labor hours as the activity driver p. Computer q. Costing out of products r. Decision to continue making a part rather than buying it s. Printer t. Customer service cost incurred u. Customer service cost assigned to products using number of complaints as the activity driver v. Report detailing individual product costs w. Commission cost x. Commission cost assigned to products using units sold as the activity driver y. Plant depreciation z. Plant depreciation assigned to products using direct labor hours Required: 1. For each cost system, classify the relevant items into one of the following categories: a. Interrelated parts b. Processes c. Objectives d. Inputs e. Outputs f. User actions 2. Explain the choices that differ between the two systems. Which system will provide the best support for the user actions? Explain. 3. Draw an operational model that illustrates each cost accounting systemwith the items that belong to the system used as examples for each component of the model. 4. Based on the operational models, comment on the relative costs and benefits of the two systems. Which system should be chosen?arrow_forward
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