Problem

Second-Stage Allocations and Margin Calculations Using the Action Analysis ApproachRefer t...

Second-Stage Allocations and Margin Calculations Using the Action Analysis Approach

Refer to the data for Theatre Seating. Inc., in Exercise 7-13 and the following additional details concerning the activity rates:

 

Activity Rates

 

Supporting Direct Labor

Batch Processing

Order Processing

Customer Service

Manufacturing overhead :

Indirect labor

$ 1.80

$72.00

$ 18.00

$ 0.00

Factory equipment depreciation

7.35

3.25

0.00

0.00

Factory administration

2.10

7.00

28.00

268.00

Selling and administrative: Wages and salaries

0.50

13.00

153.00

1,864.00

Depreciation

0.00

0.75

6.00

26.00

Marketing expenses

0.25

0.00

79.00

462.00

Total activity rate

$12.00

$96.00

$284.00

$2,620.00

Management has provided their ease of adjustment codes for purposes of preparing action analyses.

 

Ease of Adjustment Codes

Direct materials

Green

Direct labor

Yellow

Manufacturing overhead:Indirect labor

Yellow

Factory equipment depreciation

Red

Factory administration

Red

Selling and administrative: Wages and salaries

Red

Depreciation

Red

Marketing expenses

Yellow

Required:

Using Ex hibit7A-5 as a guide, prepare an action analysis report for CineMax Entertainment similar to those prepared for products.

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Solutions For Problems in Chapter 7A