Homework Answers
Solution:
A Cost Driver is the factor that creates the cost of the activity. It directly influences the Activity Cost. There should be a direct link between the cost and the activity (i.e cause and effect relationship).
Now, in the given example,
A) The cost incurred in Machine setup is based on the number of setups done. Therefore, there is direct connection between cost driver and Activity.
B) The cost incurred in machine maintenance is linked with the machine hours worked. Therefore, there is direct connection between Cost driver and Activity.
C) The Cost incurred for lighting on shop floor is linked with no.of kilowatt-hours used. Therefore, there is direct connection between Cost driver and Activity.
D) The cost incurred in Quality Control are not usually connected or linked with square feet of floor space. It is generally linked with batch size of products,etc.
E) The cost incurred in the handling of materials is connected with the weight of materials in process. Therefore, there is connection between Cost driver and Activity.
Therefore, Option D has the weakest linkage between Activity and Cost Driver.
Add Answer to:
Which of the following has the weakest linkage between activity and cost driver? A) B) C)...
c. assigns activity cost pools to products and services, then allocates overhead back to the activity...
c. assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. d. allocates overhead directly to products and services based on activity levels e. none of these answers are correct. 21. Which of the following has the weakest linkage between activity and cost driver? Activity Machine setup Machine maintenance Lighting on shop floor Quality control Manual cloth making Cost Driver Number of setups Book value of machines Number of kilowatt-bours Square feet of...
Calculate the total amount paid by the local construction company for the 5,000 windows. The estimated...
Calculate the total amount paid by the local construction
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The estimated manufacturing overhead costs for Watts Window Company for 2010 are listed below: Work space $3,000,000 Quality control inspections ..... 1,000,000 Electric power 400,000 Materials handling 1,200,000 Machine setups 700,000 Watts Company assigns overhead costs to products using an activity based costing system. The following information pertains to the activity based cost drivers and overhead costs: Type of cost Activity based cost driver Work space...
COOL DOWN Match the activity with its corresponding cost driver (or activity driver) a. Factory machine...
COOL DOWN Match the activity with its corresponding cost driver (or activity driver) a. Factory machine 1. Number of setups b. Heating 2. Number of acceptances c. Processing applications 3. Number of employees d. Machine setups 4. Number of inspections e. Providing security 5. Machine hours used f. Quality control 6. Number of applications g. Enrolling students 7. Hours worked h. Factory supervision 8. degree/ days/ space
1. 1000 points value Fellar Corp. has identified the following information Activity cost pools Materials handling...
1. 1000 points value Fellar Corp. has identified the following information Activity cost pools Materials handling Machine maintenance $60,000 51,750 Cost drivers Number of material moves Number of machine hours 960 75,000 1. Calculate the activity rate for each cost pool. (Round your answers to 2 decimal places.) Activity Rate Material Handling per Material Move Machine Maintenance per Machine Hour 2. Delermine the amount of overhead assigned to Fellar's producls if they have theolowing activity demands: (Round your intermediate calculations...
The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers....
The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers. Activity Cost Pool Budgeted Overhead Cost Cost Driver Budgeted Level for Cost Driver Pool Rate Machine setups $ 250,000 Number of setups 125 $ 2,000 per setup Material handling 75,000 Weight of raw material 37,500 lb. $ 2 per pound Hazardous waste control 25,000 Weight of hazardous chemicals used 5,000 lb. $ 5 per pound Quality control 75,000 Number of inspections 1,000 $...
The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost...
The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers. Activity cost Pool Rachine setups Material handling Hazardous waste control Quality control Other overhead costs Budgeted Overhead Cost Cost Driver $250,00 Number of setups 75,eee weight of raw material 25,00 Weight of hazardous chemicals used 75, ce Number of inspections 200,00 Machine hours $625. Budgeted Level for Cost Driver 125 37.500 lb. 5.000 lb. 1.000 20.000 5 Pool Rate $2,000 per setup 2...
3. The controller for Mitchell Supply Company has established the following overhead cost pools and cost...
3. The controller for Mitchell Supply Company has established the following overhead cost pools and cost drivers: Overhead Cost Pool Machine setup Material handling Budgeted Overhead Cost $150,000 52,500 Cost Driver Number of setups Units of raw material Number of inspections Machine hours Quality control inspectiorn Other overhead costs Total 37,500 90,000 330000 Requirements of Order no.610 5 setup 10,000 per unit Budgeted Level For Cost Driver Overhead Cost Pool Machine setup Material handling Quality control Other overhead 100 setups...
M4-3 (Static) Identifying Cost Drivers in an ABC System (LO 4-3) For each of the following...
M4-3 (Static) Identifying Cost Drivers in an ABC System (LO 4-3) For each of the following activities, indicate the appropriate category (unit, batch, product, or facility level) and suggest a possible cost driver for each pool: Activities Factory utilities Machine setups Research and development for a new product Sanding rough edges of the product Packaging the product for shipment Developing new packaging for a new product line Maintenance on equipment Assembling the product's component parts Materials handling costs Quality control...
Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:...
Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year: Cost Pools Budgeted Cost Cost Driver Cost Driver Level Setup $ 220,000 Number of setups 1,100 Ordering 110,000 Number of orders 5,500 Maintenance 275,000 Machine hours 27,500 Power 55,000 Kilowatt hours 55,000 Total direct labor hours budgeted = 11,000 hours. The following data applies to Product X, one of the products completed during the year. Direct materials $ 5,500 Direct labor $ 6,600 Units...
Orange, Inc. has identified the following cost drivers for its expected overhead costs for the Cost...
Orange, Inc. has identified the following cost drivers for its expected overhead costs for the Cost Pools Setup Ordering Maintenance Power Budgeted Cost $70,000 35,000 87,500 17,500 Cost Driver Number of setups Number of orders Machine hours Kilowatt hours Cost Driver Level 350 1,750 8,750 17,500 Total direct labor hours budgeted = 3,500 hours. The following data applies to Product X, one of the products completed during the year. Direct materials Direct labor Units completed Direct labor hours Number of...
c. assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. d. allocates overhead directly to products and services based on activity levels e. none of these answers are correct. 21. Which of the following has the weakest linkage between activity and cost driver? Activity Machine setup Machine maintenance Lighting on shop floor Quality control Manual cloth making Cost Driver Number of setups Book value of machines Number of kilowatt-bours Square feet of...
Calculate the total amount paid by the local construction
company
for the 5,000 windows.
The estimated manufacturing overhead costs for Watts Window Company for 2010 are listed below: Work space $3,000,000 Quality control inspections ..... 1,000,000 Electric power 400,000 Materials handling 1,200,000 Machine setups 700,000 Watts Company assigns overhead costs to products using an activity based costing system. The following information pertains to the activity based cost drivers and overhead costs: Type of cost Activity based cost driver Work space...
COOL DOWN Match the activity with its corresponding cost driver (or activity driver) a. Factory machine 1. Number of setups b. Heating 2. Number of acceptances c. Processing applications 3. Number of employees d. Machine setups 4. Number of inspections e. Providing security 5. Machine hours used f. Quality control 6. Number of applications g. Enrolling students 7. Hours worked h. Factory supervision 8. degree/ days/ space
1. 1000 points value Fellar Corp. has identified the following information Activity cost pools Materials handling Machine maintenance $60,000 51,750 Cost drivers Number of material moves Number of machine hours 960 75,000 1. Calculate the activity rate for each cost pool. (Round your answers to 2 decimal places.) Activity Rate Material Handling per Material Move Machine Maintenance per Machine Hour 2. Delermine the amount of overhead assigned to Fellar's producls if they have theolowing activity demands: (Round your intermediate calculations...
The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers. Activity cost Pool Rachine setups Material handling Hazardous waste control Quality control Other overhead costs Budgeted Overhead Cost Cost Driver $250,00 Number of setups 75,eee weight of raw material 25,00 Weight of hazardous chemicals used 75, ce Number of inspections 200,00 Machine hours $625. Budgeted Level for Cost Driver 125 37.500 lb. 5.000 lb. 1.000 20.000 5 Pool Rate $2,000 per setup 2...
3. The controller for Mitchell Supply Company has established the following overhead cost pools and cost drivers: Overhead Cost Pool Machine setup Material handling Budgeted Overhead Cost $150,000 52,500 Cost Driver Number of setups Units of raw material Number of inspections Machine hours Quality control inspectiorn Other overhead costs Total 37,500 90,000 330000 Requirements of Order no.610 5 setup 10,000 per unit Budgeted Level For Cost Driver Overhead Cost Pool Machine setup Material handling Quality control Other overhead 100 setups...
M4-3 (Static) Identifying Cost Drivers in an ABC System (LO 4-3) For each of the following activities, indicate the appropriate category (unit, batch, product, or facility level) and suggest a possible cost driver for each pool: Activities Factory utilities Machine setups Research and development for a new product Sanding rough edges of the product Packaging the product for shipment Developing new packaging for a new product line Maintenance on equipment Assembling the product's component parts Materials handling costs Quality control...
Orange, Inc. has identified the following cost drivers for its expected overhead costs for the Cost Pools Setup Ordering Maintenance Power Budgeted Cost $70,000 35,000 87,500 17,500 Cost Driver Number of setups Number of orders Machine hours Kilowatt hours Cost Driver Level 350 1,750 8,750 17,500 Total direct labor hours budgeted = 3,500 hours. The following data applies to Product X, one of the products completed during the year. Direct materials Direct labor Units completed Direct labor hours Number of...
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