kau.3 Riverbed Tires manufactures tires for dune buggies and has two different products, nubby tires and smooth tires. The companyproduces 6,400 nubby tires and 11,400 smooth tires each year and incurs $287,360 of overhead costs. The following information isavailable:ActivityTotal CostCost DriverMaterials handling$94,720Number of requisitionsMachine setups96,720Number of setupsQuality inspections95,920Number of inspectionsFor the nubby tires, the company has 540 requisitions, 340 setups, and 340 inspections. The smooth tires require 740 requisitions,440 setups, and 540 inspections.Determine the overhead rate for each activity.Overhead RateMaterials handling$per requisitionMachine setups$per setupQuality inspections+Aper inspection

Step 1:Computation of the aggregate of cost drivers for both the products: Nubby tiresSmooth…

Answered: Riverbed Tires manufactures tires for…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 10E: SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that...

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Gee Manufacturing produces two models of camshafts used in the production of automobile engines: Regular and High Performance. Gee currently uses an ABC system to assign costs to the two products. For the coming year, the company has the following overhead activities, costs, and activity drivers: activity expected cost activity driver activity capacity setups $214,612 set up hours 10,000 machining $420,000 machine hours 20,000 moving $112,500 move hours 5,000 total overhead $747,112 At practical capacity, the expected activity demands for each product are as follows: regular performance model high performance model units completed 30,000 8,000 set up hours 8,000 2,000 machine hours 6,000 14,000 moving hours 1,000 4,000 The production cycle time for the regular performance camshaft is 0.50 (hours per unit) and that of the high performance camshaft is 2.5 (hours per unit). Required: 1. Calculate the total and per unit overhead assigned to each model…
Gee Manufacturing produces two models of camshafts used in theproduction of automobile engines: Regular and High Performance. Geecurrently uses an ABC system to assign costs to the two products.For the coming year, the company has the following overheadactivities, costs, and activity drivers: Activity DriverActivity Capacity Activity Expected Cost Setups $214,612 Setup hours 10,000 Machining $420,000 Machine hours 20,000 Moving $112,500 Move hours 5,000 Total OH $747,112 At practical capacity, the expected activity demands for eachproduct are as follows: HighPerformanceModel RegularPerformanceModel Units completed 30,000 8,000 Setup hours 8,000 2,000 Machine hours 6,000 14,000 Moving hours 1,000 4,000 The production cycle time for the regular performance camshaftis 0.50 (hours per unit) and that of the high performance camshaftis 2.5 (hours per unit).1. Calculate the consumption ratios for eachactivity. Use these consumption…
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.
Lean accounting Dashboard Inc. manufactures and assembles automobile instrument panels for both eCar Motors and Greenville Motors. The process consists of a lean product cell for each customers instrument assembly. The data that follow concern only the eCar lean cell. For the year, Dashboard Inc. budgeted the following costs for the eCar production cell: Dashboard Inc. plans 2,000 hours of production for the eCar cell for the year. The materials cost is 240 per instrument assembly. Each assembly requires 24 minutes of cell assembly time. There was no April 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory. The following summary events took place in the eCar cell during April: A. Electronic parts and wiring were purchased to produce 450 instrument assemblies in April. B. Conversion costs were applied for the production of 400 units in April. C. 380 units were started, completed, and transferred to finished goods in April. D. 350 units were shipped to customers at a price of 800 per unit. Instructions 1. Determine the budgeted cell conversion cost per hour. 2. Determine the budgeted cell conversion cost per unit. 3. Journalize the summary transactions (a) through (d). 4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory. 5. How does the accounting in a lean environment differ from traditional accounting?
Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)
Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
The company sells firm and extra firm mattresses. We plan to use ABC. The company has accumulated the following data. Activities Cost Cost DriverMaterials processing $1,400,000 Number of partsFirmness testing 400,000Number of testsCustomer calls 200,000 Number of customer calls During the year, 100,000 parts were handled (75,000 for firm mattresses and 25,000 for extra firm), 20,000 firmness tests were conducted (12,500 for firm and 7,500 for extra firm), and 10,000 customers’ calls were answered (7,500 for firm and 2,500 for extra firm) A. Calculate the overhead rates for each activity.B. Calculate the dollar amount of overhead that should be assigned to firm and to extra firm.
Roadside Inc. manufactures the Megalite, and is reviewing the product's cost structure. Accounting records show these costs:factory space: $250,000 per yearinsurance: $47,000 per yearsupervisor salaries: $125,000 per yearmaterials: $5.00 per lampdirect labor: $2.69 per lamprecycling charge: $0.37 per lampRoadside Inc sells the Megalite to wholesalers for $13.69 each. Calculate Roadside's contribution margin as percent of selling price on the Megalite. (Rounding: tenth of a percent. Report 25.3%, for example, as "25.3".)
Dixon Robotics manufactures three robot models: the A3B4, the BC11, and the C3PO. Dixon allocates manufacturing overhead to each model based on machine-hours. A large portion of the company’s manufacturing overhead costs is incurred by the Maintenance Department. This year, the department anticipates that it will incur $100,000 in total costs. The following estimates pertain to the upcoming year. Model Estimated Machine-Hours Estimated Unitsof Production A3B4 20,000 6,250 BC11 15,000 5,000 C3PO 5,000 2,500 Ed Smith, Dixon’s cost accountant, suspects that unit costs are being distorted by using a single activity base to allocate Maintenance Department costs to products. Thus, he is considering the implementation of activity-based costing (ABC). Under the proposed ABC method, the costs of the Maintenance Department would be allocated to the following activity cost pools using the number of work orders as an activity base: (1) the repairs pool and (2) the janitorial…
Aholt Corporation makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Alt Tex How would context to se (1-2 sentenc Direct materials Direct labor $11.30 22.70 Variable manufacturing overhead 1.20 Fixed manufacturing overhead 24.70 Unit product cost $59.90 An outside supplier has offered to sell the company all of these parts it needs for $46.20 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $264,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $21.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be…
MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated overhead to products using machine-hours. Last year, the company produced 10,000 units of M3100, 17,500 units of M4100, and 10,000 units of M6100 and had the following revenues and costs: MTI Income Statement M3100 M4100 M6100 Total Sales revenue Direct costs $9,000,000 $15,000,000 $13,500,000 $37,500,000 3,000,000 600,000 Direct materials. 4,500,000 900,000 3,300,000 1,800,000 10,800,000 3,300,000 Direct labor Variable overhead Setting up machines Processing sales orders.. Warehousing. Operating machines Shipping Contribution margin. Plant administration 2,400,000 1,800,000 2,400,000 1,200,000 900,000 $14,700,000 6,000,000 Gross profit.. $ 8,700,000 MTI's controller has heard about activity-based costing and puts together an employee team to recommend cost allocation bases. The employee team recommends the following: Activity Cost Driver M3100 M4100 M6100 Setting up machines . Processing sales…
Angler Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Assembly 248,888 DLH Finishing 154,000 DLH 68,000 MH 448,800 MH $440,000 Direct labor hours Machine hours Overhead costs Assume that Angler Industries allocates overhead using a plantvide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 3.90 machine hours in the Assembly Department, and 4.00 direct labor hours and 0.6 machine hours in the Finishing Department? Multiple Chaises O O O $21.50 $17.60 $2.00. $18.10 $ 677,680 $13.20.

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