Tupperman Ltd. has $750,000 of total overhead costs. It currently uses a traditional costing system where...
Tupperman Ltd. has $750,000 of total overhead costs. It currently uses a traditional costing system where overhead costs are allocated using machine hours. The budgeted machine hours for the year are 250,000. It is considering adopting an ABC system and has identified three activities: Setups ($350,000), Quality Assurance ($250,000) and Materials Handling ($150,000). The company had budgeted 1,250 setups, 3,125 inspection hours, and 600,000 parts. One of its jobs used 35 setups, 60 inspection hours, 700 parts and 3500 machine hours. The overhead cost allocated to the job using the traditional costing system would be:
Homework Answers
Predetermined Overhead rate = Total estimated overhead/Total estimated machine hours
= 750,000/250,000 = 3 per machine hour.
Overhead allocated to Job = 3500 mh*3 per mh
= 10,500
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Tupperman Ltd. has $750,000 of total overhead costs. It
currently uses a traditional costing system where...
Tupperman Ltd. has $750,000 of total overhead costs. It currently uses a traditional costing system where...
Tupperman Ltd. has $750,000 of total overhead costs. It currently uses a traditional costing system where overhead costs are allocated using machine hours. The budgeted machine hours for the year are 250,000. It is considering adopting an ABC system and has identified three activities: Setups ($350,000), Quality Assurance ($250,000) and Materials Handling ($150,000). The company had budgeted 1,250 setups, 3,125 inspection hours, and 600,000 parts. One of its jobs used 35 setups, 60 inspection hours, 700 parts and 3,500 machine...
Company used to consider a traditional costing system based on machine hours; however, they are currently...
Company used to consider a traditional costing system based on machine hours; however, they are currently considering an activity-based costing (ABC) approach. The company estimates the usage of 50,000 direct labor hours (DLH) and 30,000 machine hours (MH) for the current year. The following data show the budgeted manufacturing overhead (OH): Activity center Cost driver Activity driver Cost Material handling # of parts handled 6,000,000 $720,000 Setup costs # of setups 750 $315,000 Machining costs # of machine hours 30,000...
1. Compute the total overhead allocated to each job under a simple costing system, where overhead...
1.
Compute the total overhead allocated to each job under a simple
costing system, where overhead is allocated based on
machine-hours.
2.
Compute the total overhead allocated to each job under an
activity-based costing system using the appropriate activity
drivers.
3.
Explain why Shirley's Custom Framing might favor the ABC
job-costing system over the simple job-costing system, especially
in its bidding process.
*There should be 10 total parts to this problem.
The job-costing system at Shirley's Custom Framing has five...
a) Assume that Peabody uses a traditional costing system, with overhead allocated based on direct labor...
a) Assume that Peabody uses a traditional costing system, with overhead allocated based on direct labor hours. Compute the total cost per unit of each of the three products. b) Instead assume that Peabody uses an ABC system with three cost drivers: machine hours, inspections, and setups. Manufacturing overhead cost of $1,300,000 is due to setups, and $130,000 to inspections, with the rest allocated to machine hours. Compute the total cost per unit of the three products. The following table...
Cornwell Products has adopted an ABC costing system to allocate its overhead costs. The following manufacturing...
Cornwell Products has adopted an ABC costing system to allocate its overhead costs. The following manufacturing activities and cost drivers have been identified: Activity Machine setup Machining Polishing Quality control Facility-level costs Total overhead costs Estimated OH Costs $180,000 $1,050,000 $100,000 $320,000 $150,000 $1,800,000 Esimated amount of allocation base 2,000 setups 12,000 machine hours 5,000 polishing cloths 4,000 test runs 50,000 DL hours The job cost record for Job #804 revealed the following Direct material costs: $1,250 Direct labor 12...
E4-14 (Algo) Assigning Costs Using Traditional System, ABC System (LO 4-1, 4-3, 4-4,4-5) Julio produces two...
E4-14 (Algo) Assigning Costs Using Traditional System, ABC System (LO 4-1, 4-3, 4-4,4-5) Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools materials handling and setup. The collected data follow: Standard Model 26,800 Deluxe Model 31,800 Number of machine hours Number of material moves...
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional...
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow: Standard Model Deluxe Model Number of machine hours 26,600 31,600 Number of material moves 630 930 Number of setups 100 580 Total estimated overhead costs are $406,120,...
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional...
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow: Number of machine hours Number of material moves Number of setups Standard Model Deluxe Model 27,000 32,000 650 950 120 600 Total estimated overhead costs are $394,160,...
The job costing system at Suzy's Custom Framing has ve indirect contpools (purchasing, material handing machine...
The job costing system at Suzy's Custom Framing has ve indirect contpools (purchasing, material handing machine maintenance product inspection, and packaging). The company is in the process of bidding on two jobs Job 215. an order of 10 inche personalized frames, and Job 325an order of 6 standard personalized frames. The controller wants you to compare overhead allocated under the current simple job-costing wystem and a newly designed activity based job-costing system. Total budgeted costs in each indirect cost pool...
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional...
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow. Number of machine hours Number of material moves Number of setups Standard Model 25,000 550 80 Deluxe Model 30,000 850 500 Total estimated overhead costs are $303,560,...
1.
Compute the total overhead allocated to each job under a simple
costing system, where overhead is allocated based on
machine-hours.
2.
Compute the total overhead allocated to each job under an
activity-based costing system using the appropriate activity
drivers.
3.
Explain why Shirley's Custom Framing might favor the ABC
job-costing system over the simple job-costing system, especially
in its bidding process.
*There should be 10 total parts to this problem.
The job-costing system at Shirley's Custom Framing has five...
Cornwell Products has adopted an ABC costing system to allocate its overhead costs. The following manufacturing activities and cost drivers have been identified: Activity Machine setup Machining Polishing Quality control Facility-level costs Total overhead costs Estimated OH Costs $180,000 $1,050,000 $100,000 $320,000 $150,000 $1,800,000 Esimated amount of allocation base 2,000 setups 12,000 machine hours 5,000 polishing cloths 4,000 test runs 50,000 DL hours The job cost record for Job #804 revealed the following Direct material costs: $1,250 Direct labor 12...
E4-14 (Algo) Assigning Costs Using Traditional System, ABC System (LO 4-1, 4-3, 4-4,4-5) Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools materials handling and setup. The collected data follow: Standard Model 26,800 Deluxe Model 31,800 Number of machine hours Number of material moves...
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow: Number of machine hours Number of material moves Number of setups Standard Model Deluxe Model 27,000 32,000 650 950 120 600 Total estimated overhead costs are $394,160,...
The job costing system at Suzy's Custom Framing has ve indirect contpools (purchasing, material handing machine maintenance product inspection, and packaging). The company is in the process of bidding on two jobs Job 215. an order of 10 inche personalized frames, and Job 325an order of 6 standard personalized frames. The controller wants you to compare overhead allocated under the current simple job-costing wystem and a newly designed activity based job-costing system. Total budgeted costs in each indirect cost pool...
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow. Number of machine hours Number of material moves Number of setups Standard Model 25,000 550 80 Deluxe Model 30,000 850 500 Total estimated overhead costs are $303,560,...
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