Chapter 5: The Following Data From An Activity-Based Costing
Ch5 1the Following Data From An Activity Based Costing Accounting Syst
Ch5 1the Following Data From An Activity Based Costing Accounting Syst
Ch5-1 The following data from an activity-based costing accounting system are offered: a. Determine the total amount of supervisory wages and factory utilities costs that would be allocated to the Unit Processing activity cost pool. Show your work! b. Determine the total amount of supervisory wages and factory utilities costs that would NOT be assigned to products. Show your work!
Supervisory wages $ 94,000 Factory utilities $ 128,000 Distribution of Resource Consumption across Activity Cost Pools: Activity Cost Pools Batch Set-Ups Unit Processing Other Total Supervisory wages 34% 64% 2% 100% Factory utilities 49% 35% 16% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products. Ch5-2 The following data from an activity-based costing system are provided: a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all calculations to the nearest whole cent. b. Using the activity-based costing system, compute the customer margin for the Hoium family. Round off all calculations to the nearest whole cent. c. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaning hours. Compute the margin for the Hoium family. Round off all calculations to the nearest whole cent. Activity Cost Pool Total Cost Total Activity Cleaning $ 263,784 $ 34,800 hours Job support 145,,000 jobs Client support 4, clients Other 170,000 Not applicable Total $ 583,738 The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The Hoium family requested 45 jobs during the year that required a total of 90 hours of housecleaning and was charged $2,000. Ch,000 units per year of the B345 gasket are manufactured for use in a final product. Data concerning the associated unit production costs follow: An outside supplier has offered to provide all of the B345 gaskets it requires resulting in a 25% reduction of fixed manufacturing overhead costs; assume that direct labor is a variable cost. a. Assuming no alternative use for the facilities presently devoted to production of the B345 gaskets. If the outside supplier offers to sell the gaskets for $0.46 each, should Kirsten Corporation accept the offer? b. Assuming the facilities presently devoted to production of the B345 gaskets could be used to expand production of another product that would yield an additional contribution margin of $10,000 annually. What is the maximum price Kirsten Corporation should be willing to pay the outside supplier for B345 gaskets? Fully support your answers with appropriate calculations. Direct materials $ 0.15 Direct labor 0.10 Variable manufacturing overhead 0.13 Fixed manufacturing overhead 0.24 Total manufacturing cost per unit $ 0.62 Ch6-2 A recent monthly income statement is given below: If Store B is closed, one-fourth of its traceable fixed expenses will continue unchanged and Store A sales will decrease by 10 percent.
The company allocates common fixed expenses to the stores on the basis of sales dollars. Required: Determine the monthly financial advantage (disadvantage) of closing Store B. Total Store A Store B Sales Variable expenses Contribution margin Traceable fixed expenses Store segment margin Common fixed expenses Net operating income Ch7-1 (Ignore income taxes) Ostermeyer Corporation is considering a project that would require an initial investment of $247,000 and would last for 7 years. The incremental annual revenues and expenses for each of the 7 years would be as follows: Required: Determine the payback period of the project. Show your work!
Sales $ 198,000 Variable expenses 46,000 Contribution margin 152,000 Fixed expenses: Salaries $ 22,000 Rents 32,000 Depreciation 33,000 Total fixed expenses 87,000 Net operating income $ 65,000 At the end of the project, the scrap value of the project's assets would be $16,000. Ch7-2 (Ignore income taxes.) A project that would have a ten-year life and would require a $1,000,000 investment in equipment is considered. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows: a. Compute the project's net present value. b. Compute the project's internal rate of return to the nearest whole percent. c. Compute the project's payback period. d. Compute the project's simple rate of return. Sales $ 2,000,000 Variable expenses 1,400,000 Contribution margin 600,000 Fixed expenses: Fixed out-of-pocket cash expenses $ 300,000 Depreciation 100,,000 Net operating income $ 200,000 All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 12%.