Managerial Accounting
7th Edition
ISBN: 9781260247886
Author: Wild
Publisher: MCG
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Chapter 4, Problem 17E
Exerciser 17-14 Activity-based costing P3 A2
Glassworks inc. products two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following darte.
| Rounded Edge | Squared Edge | Total | |
| Direct materials | $ 19,000 | $ 43,200 | $ 62,200 |
| Direct labor | 12,200 | 23,800 | 36,000 |
| 36,600 | 71,400 | 108,000 | |
| Total cost | $ 67,800 | $ 138,400 | $206,200 |
| Quantity produced | 10,500 ft. | 14,100 ft. | |
| Average cost per ft. (rounded) | $ 6.46 | $ 9.82 |
Glasswork’s controller wishes to apply activity-based costing (ABC) to allocate the $108,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly form that reported above. She has collected the following information.
| Overhead cost category (Activity cost Pool) | Cost |
| Supervision | $ 5,400 |
| Depreciation of machinery | 56,600 |
| Assembly line preparation | 46,000 |
| Total overhead | $ 108,000 |
She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines.
| Overhead cost Category |
(Activity Cost Pool)
Required
- Assign these three overhead cost pools to each of the two products using ABC.
- Determine average cost per foot for each of the two products using ABC. Check (2) Rounded edge. $5.19; Squared edge, $10.76
- Compare the average cost per foot under ABC with the average cost pr foot under the current method for each product. Explain why a difference between the two cost allocation method exists.
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Students have asked these similar questions
Exercise 17-19 (Algo) Activity-based costing to compute activity rates, overhead cost per unit,
and product cost per unit LO P3
Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the
following cost data.
Rounded Edge Squared Edge
$ 34,800
11,600
41,400
$ 87,800
$ 46,800
31,200
79,400
$ 157,400
Total
$ 81,600
42,800
120,800
$ 245,200
Direct materials
Direct labor
Overhead (using plantwide rate)
Total product cost
Units produced
11,600
$ 7.57
15,600
$ 10.09
Product cost per unit
Northwest's controller wants to apply activity-based costing to allocate the $120,800 of overhead cost to the two products
to see whether product cost per unit would change markedly from that above. The company's budgeted activity usage
equals its actual activity usage for the period. The following additional information is collected.
Activity Usage
Squared Edge
471 orders
1,500 hours
210 setups
Rounded Edge
Activity
Purchasing
Depreciation of machinery…
PROCESS COSTING I
Discussion Question
J&G Manufacturing makes a single product by way of three separate processes. Details of
production for the month ending June 30 were as follows:
Process
Process 1 Process 2 | Process 3
$390,000
Input material:
Material added
16,250 kg
$36,750
$92,200
$63,000
Direct Labour cost
$57.300
$61,000
$112,800
$97,080
Manufacturing Overhead
Normal losses
8%
6%
6%
Output
|Scrap value of losses
13,250 kg
12,000 kg
$16.00/kg| $32.00/kg
13,750 kg
The nature of the process requires equipment to be cleaned at the end of each month; hence
there is no opening or closing stock of product in process.
Required:
i) The process account for each process: and
ii)
The abnormal loss/gain account(s) showing J & G Manufacturing true loss/gain.
Appendix
EX 20-28
Cost per equivalent unit: average cost method
The following information concerns production in the Forging Department for June. The
Forging Department uses the average cost method.
ACCOUNT NO.
ACCOUNT Work in Process-Forging epartment
Balance
Debit
Credit
Debit
Credit
Date
Item
5,000
June
1
Bal., 500 units, 40% completed
30
Direct materials, 3,700 units
49,200
54,200
30
Direct labor
25,200
79,400
104,520
Factory overhead
Goods transferred, 3,600 units
30
25,120
30
30
Bal., 600 units, 70% completed
a. Determine the cost per equivalent unit.
b. Determine cost of units transferred to Finished Goods.
Determine the cost of units in ending Work in Proces.
Chapter 4 Solutions
Managerial Accounting
Ch. 4 - Prob. 1MCQCh. 4 - Prob. 2MCQCh. 4 - All of the following are examples of batch-level...Ch. 4 - Prob. 4MCQCh. 4 - Prob. 5MCQCh. 4 - Why are overhead costs allocated to products and...Ch. 4 - What are three common methods of assigning...Ch. 4 - Why are direct labor hours and machine hours...Ch. 4 - What are the advantages of using a single plant...Ch. 4 - The usefulness of a single plant wide overhead...
Ch. 4 - What is a cost object?Ch. 4 - Explain why a single plantwide overhead rate can...Ch. 4 - Why are multiple departmental overhead rates more...Ch. 4 - Prob. 9DQCh. 4 - Prob. 10DQCh. 4 - Prob. 11DQCh. 4 - Prob. 12DQCh. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - 15. What are the four activity levels associated...Ch. 4 - Prob. 16DQCh. 4 - Prob. 17DQCh. 4 - Prob. 18DQCh. 4 - Prob. 1QSCh. 4 - Prob. 2QSCh. 4 - Prob. 3QSCh. 4 - Prob. 4QSCh. 4 - Prob. 5QSCh. 4 - Prob. 6QSCh. 4 - Prob. 7QSCh. 4 - Prob. 8QSCh. 4 - Plant wide rate method P1 A manufacturer uses...Ch. 4 - Prob. 10QSCh. 4 - Prob. 11QSCh. 4 - Prob. 12QSCh. 4 - Prob. 13QSCh. 4 - Prob. 14QSCh. 4 - Prob. 15QSCh. 4 - Prob. 16QSCh. 4 - Exercise 17-17 Identifying activity levels C3...Ch. 4 - Prob. 2ECh. 4 - Exercise 17-1 Computing Plantwide overhead rates...Ch. 4 - Prob. 4ECh. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Exercise 17-5 Departmental overhead rates P2 Refer...Ch. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Prob. 16ECh. 4 - Exerciser 17-14 Activity-based costing P3 A2...Ch. 4 - Prob. 18ECh. 4 - Problem 17-1A Comparing costs using ABC with the...Ch. 4 - Prob. 2PSACh. 4 - Prob. 3PSACh. 4 - Prob. 4PSACh. 4 - Prob. 5PSACh. 4 - Prob. 1PSBCh. 4 - Prob. 2PSBCh. 4 - Prob. 3PSBCh. 4 - Prob. 4PSBCh. 4 - Prob. 5PSBCh. 4 - Prob. 4SPCh. 4 - Prob. 1AACh. 4 - Prob. 2AACh. 4 - Prob. 3AACh. 4 - Prob. 1BTNCh. 4 - Prob. 2BTNCh. 4 - Accounting professionals who for private companies...Ch. 4 - Prob. 4BTNCh. 4 - Prob. 5BTNCh. 4 - Visit and observe the processes of three different...
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