A. True or False / Traditionally, Manufacturing Company allocated manufacturing overhead based on machine hours to...
A. True or False / Traditionally, Manufacturing Company allocated manufacturing overhead based on machine hours to products A and B. For 2019, the allocations to products A and B, would be $175,000 and $150,000, respectively. Based on careful analysis, if overhead was allocated based on activity based costing (ABC) to products A and B, it would be $130,000 and $195,000, respectively. If the company implements ABC costing, Product B will be viewed as more profitable than before.
B. True or False / Using just-in-time processing usually increases carrying costs and risks of spoilage and obsolescence related to inventories.
C. True or False / Just-in-time processing is likely to be a more realistic option if the company’s vendors are located nearby, instead of throughout the country.
Homework Answers
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A. True or False / Traditionally, Manufacturing Company
allocated manufacturing overhead based on machine hours to...
TRUE or FALSE? In the second-stage allocation in activity-based costing, costs that were allocated in the...
TRUE or FALSE? In the second-stage allocation in activity-based costing, costs that were allocated in the first stage are assigned to products. O True O False
True of False
Following is a list of statements. Identify each statement as true or false.1.A product’s cost can be estimated most accurately when this cost can be traced directly to the product produced or the service provided.select an option TrueFalse2.Overhead costs are the easiest costs to determine because they can be traced easily to the product.select an option ...
Mastery Problem: Activity-Based Costing (Advanced) Activity-Based Costing Traditionally, Overhead cost: Sometimes referred to as "factory overhead,"...
Mastery Problem: Activity-Based Costing (Advanced) Activity-Based Costing Traditionally, Overhead cost: Sometimes referred to as "factory overhead," this is an indirect cost that is not directly tied to the production of units, yet nonetheless must be built into product cost in order to appropriately price it. Examples are managerial salaries, rent expense, setup costs, and property taxes.overhead costs are assigned based arbitrarily on the rate of either Direct labor: This is a labor cost directly associated with the production of goods...
Donald Trump’s Company has budgeted manufacturing overhead costs of $3,000,000. It has allocated overhead on a plant-wid...
Donald Trump’s Company has budgeted manufacturing overhead costs of $3,000,000. It has allocated overhead on a plant-wide basis to its two products (The Wall and The Wig) using machine hours, which are estimated to be 100,000 for the current year. The company has decided to experiment with activity-based costing and has created five activity cost pools and related activity cost drivers as follows: Activity Cost Driver Estimated Overhead Expected Activity Material handling Number of moves $250,000 50,000 Purchase orders Number...
Q red Which of the following is most likely to be true of the manufacturing overhead...
Q red Which of the following is most likely to be true of the manufacturing overhead costs assigned to a product with relatively low volume and high complexity? 1.00 con Select one: a. A volume-based system will assign more manufacturing overhead costs to the product than an ABC system. b. An ABC system will assign more manufacturing overhead costs to the product than a volume-based system c An ABC system will assign manufacturing overhead costs to the product, while a...
Sidney Industries manufactures a variety of custom products. The company has traditionally used a plantwide manufacturing...
Sidney Industries manufactures a variety of custom products. The
company has traditionally used a plantwide manufacturing overhead
rate based on machine hours to allocate manufacturing overhead to
its products. The company estimates that it will incur $1,350,000
in total manufacturing overhead costs in the upcoming year and will
use 15,000 machine hours.
Sidney Industries manufactures a variety of custom products. The company has traditionally used a plantwide manufacturing overhead rate based on machine hours to allocate manufacturing overhead to its...
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...
Testbank Exercise 3 Stockin Company produces Tablets and Books. Total overhead costs traditionally have been allocated...
Testbank Exercise 3 Stockin Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products. Activity Pool Binding Printing Product design General Total overhead costs Department Costs Cost driver $236,731.25 Number of units 842,058.00 Machine hours 187,488.00 Change orders 694,522.75 None $1,960,800.00 Other information is as...
Chic Design allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the...
Chic Design allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the company reported the following actual results for the production of 2,000 flower pots: 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Direct materials ............... . Purchased 27,900 pounds at a cost of $3.40 per pound; Used 27,400 pounds to produce 2,000 pots Direct labor Worked...
Question 3 International Steel Company has budgeted manufacturing overhead costs of $1,995,000. It has allocated overhead...
Question 3 International Steel Company has budgeted manufacturing overhead costs of $1,995,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hours, which are estimated to be 100,000 for the current year. The company has decided to experiment with activity-based costing and has created five activity cost pools and related activity cost drivers as follows: Activity Centre Cost Driver Estimated Activity Material handling Purchase orders Product testing Machine set-up Machining...
TRUE or FALSE? In the second-stage allocation in activity-based costing, costs that were allocated in the first stage are assigned to products. O True O False
Q red Which of the following is most likely to be true of the manufacturing overhead costs assigned to a product with relatively low volume and high complexity? 1.00 con Select one: a. A volume-based system will assign more manufacturing overhead costs to the product than an ABC system. b. An ABC system will assign more manufacturing overhead costs to the product than a volume-based system c An ABC system will assign manufacturing overhead costs to the product, while a...
Sidney Industries manufactures a variety of custom products. The
company has traditionally used a plantwide manufacturing overhead
rate based on machine hours to allocate manufacturing overhead to
its products. The company estimates that it will incur $1,350,000
in total manufacturing overhead costs in the upcoming year and will
use 15,000 machine hours.
Sidney Industries manufactures a variety of custom products. The company has traditionally used a plantwide manufacturing overhead rate based on machine hours to allocate manufacturing overhead to its...
Testbank Exercise 3 Stockin Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products. Activity Pool Binding Printing Product design General Total overhead costs Department Costs Cost driver $236,731.25 Number of units 842,058.00 Machine hours 187,488.00 Change orders 694,522.75 None $1,960,800.00 Other information is as...
Chic Design allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the company reported the following actual results for the production of 2,000 flower pots: 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Direct materials ............... . Purchased 27,900 pounds at a cost of $3.40 per pound; Used 27,400 pounds to produce 2,000 pots Direct labor Worked...
Question 3 International Steel Company has budgeted manufacturing overhead costs of $1,995,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hours, which are estimated to be 100,000 for the current year. The company has decided to experiment with activity-based costing and has created five activity cost pools and related activity cost drivers as follows: Activity Centre Cost Driver Estimated Activity Material handling Purchase orders Product testing Machine set-up Machining...
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