ABC Company wants to estimate its indirect manufacturing costs. It is considering using either one of...
ABC Company wants to estimate its indirect manufacturing costs. It is considering using either one of two different cost drivers, units produced and machine hours. ABC gathered information for 4 weeks of data.
Use this data to
- calculate the cost equation using linear regression method with units as the cost driver, and
- estimate the indirect manufacturing costs if it expects to produce 210 more units than they did in Week 4.
The data follows. For the regression, you may solve for the equation any way you choose. Remember we did Excel formulas, graphing and the regression in Analysis Toolpak.
| Week | Units | Machine Hours | Indirect Manufacturing Costs |
| 1 | 4,000 | 1,630 | 240,900 |
| 2 | 4,050 | 1,614 | 237,750 |
| 3 | 4,100 | 1,614 | 238,800 |
| 4 | 4,200 | 1,611 | 239,050 |
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ABC Company wants to estimate its indirect manufacturing costs.
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Pools
Setup……………………………………………………………………………………………………………………$59,500
Materials
handling……………………………………………………………………………………………….$16,000
Machine
operation……………………………………………………………………………………………….$300,000
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drivers
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Materials
moves………………………………………………………………………………………………………$640
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hours…………………………………………………………………………………………………………$20,000
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orders…………………………………………………………………………………………………………$1,000
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period to produce 500 unit:
Setups……………………………………………………………………………………………………………………..20
Materials
moves……………………………………………………………………………………………………….80
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hours…………………………………………………………………………………………………………1,900
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orders………………………………………………………………………………………………………….150
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Cormwell Products has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and cost drivers have been identified: The Job Cost Record for Job #804 revealed that direct materials requisitioned forthe job totaled $1,250. The Job Cost Record also showed that direct labor for this job totaled 12 hours at a wage rate of $30 per hour. Total estimated Total estimated amount Activit l costs related of allocation base activity to activity $180,000 2,000 setups 2000 Machine...
ABC Company produces hand-held calculators. The company wants to calculate the fixed variable costs associated with the maintenance cost incurred by the factory. Data for the four months were collected: Maintenance Machine Costs Hours June $ 4,180.00 328.0 July $ 3,956.00 313.0 August $ 4,686.00 386.0 September $ 4,240.00 352.0 Coefficients shown by a regression program are: Intercept X Variable 1 800.00 10.50 a) Using the results of regression, compute the fixed cost of maintenance. b) Using the results of...
McKnight Industries is in the process of analyzing its
manufacturing overhead costs. McKnight Industries is not sure if
the number of units produced or number of direct labour hours is
the best cost driver to use for predicting manufacturing overhead
costs.
1. Use Excel regression analysis to determine Mcknight Industries' manufacturing overhead cost equation using DL hours as the cost driver. Comment on the R-square. Estimate MOH costs if Mcknight Industries incurs 26,100 DL hours in January 2. Use Excel...
Two-Stage ABC for Manufacturing Merlot Company has determined its activity cost pools and cost drivers to be the following: Cost Pools Setup Material handling Machine operation packing Total indirect manufacturing costs $112,000 25,600 480,000 60,000 $677,600 Cost drivers Setups Material moves Machine hours Packing orders 350 640 20,000 1,200 One product made by Merlot, metal casements, used the following activities during the period to produce 500 units: Setups Material moves 80 Machine hours 1,900 Packing orders 150 20 a. Calculate...
P5-4A. Stage
Two ABC for Manufacturing Merlot Company has determined
its activity cost pools and cost drivers to be the following:
Cost
Pools
Setup……………………………………………………………………………………………………………………$59,500
Materials
handling……………………………………………………………………………………………….$16,000
Machine
operation……………………………………………………………………………………………….$300,000
Packing…………………………………………………………………………………………………………………$60,000
Total indirect
Manufacturing costs………………………………………………………………………..$435,500
Cost
drivers
Setups……………………………………………………………………………………………………………………..$350
Materials
moves………………………………………………………………………………………………………$640
Machine
hours…………………………………………………………………………………………………………$20,000
Packing
orders…………………………………………………………………………………………………………$1,000
One product made by
Merlot, metal casements, used the following activities during the
period to produce 500 unit:
Setups……………………………………………………………………………………………………………………..20
Materials
moves……………………………………………………………………………………………………….80
Machine
hours…………………………………………………………………………………………………………1,900
Packing
orders………………………………………………………………………………………………………….150
Required
Calculate the cost per unit of activity for each activity cost
pool...
Two-Stage ABC for Manufacturing Meridian Company has determined its activity cost pools and cost drivers to be the following: Cost pools Setup $63.000 Material handling 25,600 Machine operation 220,000 Packing 90.000 Total indirect manufacturing costs $398,600 Cost drivers Setups 350 Material moves 640 Machine hours 20,000 Packing orders 1.200 One product made by Meridian, metal casements, used the following activities during the period to produce 500 units: Setups 20 Material moves Machine hours 1,900 Packing orders 150 (a) Calculate the...
Alrex company is using an activity-based costing (ABC) system. The company produces and sells two products: Basic and Pro. The company consists of two departments: Production (where all manufacturing activities are taken) and Marketing (which engages in selling and admin activity only). The ABC system includes in unit product costs all costs easily associated with units. In addition, in the ABC system, there are four major indirect activities: Machine Setups, Special Processing, Factory Supervision, and Customer Relation The prices, direct...
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