During the current year, Pitt Company incurred costs to develop and produce a routine, low-risk computer software product. 1,300,000 Completion of detailed program design Costs incurred for coding and testing to establish technological feasibility Other coding costs after establishment of technological feasibility 1,000,000 2,400,000

During the current year, Pitt Company incurred costs to develop and produce a routine, low-risk computer software product. 1,300,000 Completion of detailed program design Costs incurred for coding and testing to establish technological feasibility Other coding costs after establishment of technological feasibility 1,000,000 2,400,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 7RE

See similar textbooks

Similar questions

During the current year, Pitt Company incurred costs to develop and produce a routine, low-risk computer software product. 1,300,000 Completion of detailed program design Costa incurred for coding and testing to establish technological feasibility Other coding costs after establishment of technological feasibility Other testing costs after establishment of technological feasibility Costs of producing product masters for training materials Duplication of computer software and training materials from product masters (1,000 units) Packaging product (500 units) 1,000,000 2,400,000 2,000,000 1,500,000 2,500,000 1. In the year-end statement of financial position, what amount should be reported in inventory? a. 2,500,000 b. 3,400,000 c. 4,000,000 d. 4,900,000 2. What total amount of the costs incurred should be expensed immediately? a. 8,200,000 b. 2,300,000 c. 6,700,000 d. 4,400,000 3. In the year-end statement of financial position, what amount should be capitalized as software cost? a.…
During the current year, Pitt Company incurred costs to develop and produce a routine, low-risk computer software product. 1,300,000 Completion of detailed program design Costs incurred for coding and testing to establish technological feasibility Other coding costs after establishment of technological feasibility Other testing costs after establishment of technological feasibility Costs of producing product masters for training materials Duplication of computer software and training materials from product masters (1,000 units) Packaging product (500 units) 3. In the year-end statement of financial position, what amount should be capitalized as software cost? 1,000,000 2,400,000 2,000,000 1,500,000 2,500,000 900,000 a. 5,400,000 b. 5,700,000 c. 5,900,000 d. 6,900,000
Self-Construction Olson Machine Company manufactures small and large milling machines. Selling prices of these machines range from 35,000 to 200,000. During the 5-month period from August 1, 2019, through December 31, 2019, Olson manufactured a milling machine for its own use. This machine was built as part of the regular production activities. The project required a large amount of time front planning and supervisory personnel, as well as that of some of the companys officers, because it was a more sophisticated type of machine than the regular production models. Throughout the 5-month period, Olson charged all costs directly associated with the construction of the machine to a special account entitled Asset Construction Account. An analysis of the charges to this account as of December 31, 2019, follows: Olson allocates factory overhead to normal production as a percent of direct labor dollars as follows: Olson uses a flat rate of 40% of direct labor dollars to allocate general and administrative overhead. During the machine testing period, a cutter head malfunctioned and did extensive damage to the machine table and one cutter housing. This damage was not anticipated and was the result of an error in the assembly operation. Although no additional raw materials were needed to make the machine operational after the accident, the following labor for rework was required: Olson has included all these labor charges in the asset construction account. In addition, it included in the account the repairs and maintenance charges of 1,340 that it incurred as a result of the malfunction. Required: 1. Compute, consistent with GAAP and common practice, the amount that Olson should capitalize for the milling machine as of December 31, 2019, when it declares the machine operational. 2. Next Level Identify the costs you included in Requirement 1 for which there are acceptable alternative procedures. Describe the alternative procedure(s) in each case.
At the end of 20x5, Bing Pharmaceuticals began to implement an environmental quality management program. As a first step, it identified the following costs in its accounting records as environmentally related for the calendar year just ended: Required: 1. Prepare an environmental cost report by category. Assume that total operating costs are 150,000,000. 2. Use a pie chart to illustrate the relative distribution percentages for each environmental cost category. Comment on what this distribution communicates to a manager.
For situations 1 trough 6, provide the following information: a. An estimate of the non-value-added cost caused by each activity b. The root caused of the activity cost (such as plant layout, process design, and product design) c. The appropriate cost reduction measure: activity elimination, activity reduction, activity sharing, or activity selection 1. Inspection time for a plant is 4,000 hours per year. The cost of inspection consists of salaries of four inspectors, totaling $100,000. Inspection also uses supplies costing $3 per inspection hour. A supplier evaluation program, product redesign, and process redesign reduced the need for inspection by creating a zero-defect environment. 2. Each unit of a product required seven components, the average number of components is 7.3 due to component failure, requiring rework and extra components. By developing relations with the right suppliers and increasing the quality of the purchased component, the average number of components can be…
Robotic Construction Toys Corp. is using a costs-of-quality approach to evaluate design engineering efforts for a new toy robot. The company's senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the two-year life of the toy robot follow. Also shown are the cost allocation rates for the activities. (Click on the icon to view the information.) Data table Activity Inspection of incoming materials Inspection of finished goods.... Number of defective units discovered in-house. Number of defective units discovered by customers.. Lost sales to dissatisfied customers Requirements ...... **** Predicted Reduction in Activity Units 3. What major difficulty would management have had in implementing this costs-of-quality approach? What alternative approach could it use to measure quality improvement? 300 $ 300 $ 3,200 $ 900 $ 320 $ - 1. Calculate the predicted quality cost savings from the…
Activity-Based Costing Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools: FabricationDepartment FinishingDepartment Cost Driver Maintenance $ 36,000 18,000 Machine hours Materials handling 54,000 27,000 Material moves Machine 126,000 9,000 Machine setups Inspections - 45,000 Inspection hours Total $ 216,000 $ 99,000 The following activity predictions were also made for the year: FabricationDepartment FinishingDepartment Machine hours 5,000 2,500 Material moves 1,500 750 Machine setups 350 25 Inspection hours - 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering…
For situations 1 trough 3, provide the following information for each number:a. An estimate of the non-value-added cost caused by each activityb. The root caused of the activity cost (such as plant layout, process design, and product design)c. The appropriate cost reduction measure: activity elimination, activity reduction, activity sharing,or activity selection Inspection time for a plant is 4,000 hours per year. The cost of inspection consists of salaries of four inspectors, totaling $100,000. Inspection also uses supplies costing $3 per inspection hour. A supplier evaluation program, product redesign, and process redesign reduced the need for inspection by creating a zero-defect environment. Each unit of a product required seven components, the average number of components is 7.3 due to component failure, requiring rework and extra components. By developing relations with the right suppliers and increasing the quality of the purchased component, the average number of components…
Markowis Corp. has collected the following data concerning its maintenance costs for the past 6 months.July August September October November DecemberUnits Produced18,000 32,000 36,000 22,000 40,000 38,000Total Cost$36,000 48,000 55,000 38,000 74,500 62,000Compute the variable- and fixed-cost elements using the high-low method.
FirstClass Gaming Inc. manufactures components for computer games within a relevant range of 72,000 to 114,000 components per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: produce a solution Components produced 72,000 91,200 114,000 Total costs: Total variable costs $24,480 (d) (j) Total fixed costs 27,360 (e) (k) Total costs $51,840 (f) (l) Cost per unit: Variable cost per unit (a) (g) (m) Fixed cost per unit (b) (h) (n) Total cost per unit (c) (i) (o) Complete the cost schedule below. Round costs per unit to the nearest cent. Cost Schedule Components produced 72,000 91,200 114,000 Total costs: Total variable costs $24,480 $fill in the blank 1 $fill in the blank 2 Total fixed costs…
A company processes raw material into Products R, B, T and D. Products R, B and T are joint products and D is classified as a by-product. In process 1, 50 000 kg of material will be processed at a cost of R220 600 worth of material, R40 500 labour and R24 500 overheads. After the basic processing in process 1, thirty percent of the input is transferred to process B. In Process B additional costs of R25 400 are incurred and product B (from process B) can then be sold for R28 per kg. They transfer 60% of the original material input (from process 1) to process 2 and then the remainder to Process D. The products in process D are considered a by-product (By-product D) and have a sales price of R6 per kilogram. The cost involved with the selling of the by-product is R7 000 in total. The business account for this by crediting the net market value of by-products produced to the general production costs. In process 2 the materials processed further at a cost of R21 200. They then…
Due to the increased intensity of competition, the company is contemplating the activitybased costing method to help understand and control its costs better. The following are the costing and operating details collected for the pilot testing purpose. Material Handling QA Total Documentation $750,000 $1,100,000 $1,850,000 Fork Lift Truck Depreciation $500,000 $250,000 $750,000 Palletizing $1,250,000 - $1,250,000 Inspection - $650,000 $650,000 Total $2,500,000 $2,000,000 $4,500,000 Number of process checklist forms 7 17 13 37 Fork Lift Truck Hours 15 35 25 75 Number of pallets 25 145 80 250 Number of inspection hours 400 1,100 1,000 2,500 Question 1. Compute the activity-based cost allocated to all products. Would you recommend for the change to ABC? Explain