MANAGERIAL ACCOUNTING F/MGRS.
6th Edition
ISBN: 9781264100590
Author: Noreen
Publisher: RENT MCG
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Chapter IE, Problem 11E
1.a.
To determine
Introduction: Total fixed costs do not change with the change in activity base or unit. In the other words, it remains the same at all levels of production. For instance, rent, interest on loans,
The total fixed cost for the Year 2023.
2a.
To determine
Introduction: The income statement of the business shows all income and expenses of the business at the end of the accounting period. It shows the net income or loss for the business. This is one of the financial statements of the business, which is used for analyzing the profitability of the business.
To show: The variable costing income statement for the Year 2023.
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1. Assign Overhead Costs to Activity Cost Pools
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First-Stage Allocation to Activity Cost Pools - Excel
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2 Total costs and distribution of resource consumption across activity cost pools:
3
4
Activity Cost Pools
Customer
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Relations
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Total
6 Production Department:
7
Indirect factory wages
$
400,000
50%
30%
15%
5% 100%
Factory equipment depreciation
Factory utilities
10 Factory property taxes and insurance
8
150,000
55%
30%
0%
15% 100%
9
120,000
59%
34%
0%
7%
100%
75,000
57%
33%
0%
10%
100%
11
12 General Administrative Department:
Administrative wages and salaries
Office equipment depreciation
13
275,000
20%
10%
40%
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14
40,000
32%
16%
15%
37%
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15
Administrative property taxes and insurance
60,000
0%
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100%…
ivity Based Costing Assignment i
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Required information
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Part Z
Part X
Totals
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Textra produces parts for a machine manufacturer. Parts go through two departments, Molding and Trimming.
The company budgets overhead cost of $265,000 in the Molding department and $225,000 in the Trimming
department. The company budgets 16,000 machine hours (MH) in Molding and 25,000 direct labor hours
(DLH) in Trimming. Actual production information follows.
Number of
Units
3,000
4,000
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Molding Department
Hours per Unit
2.0 MH per unit
2.5 MH per unit
Required:
1. Compute a departmental overhead rate for the Molding department based on machine hours and a departmental ove
rate for the Trimming…
Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality
control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities:
Activity
Activity Cost
Activity Base
Production setup
$ 97,500
Number of setups
Procurement
137,500
Number of purchase orders (PO)
Quality control
187,500
Number of inspections
Materials management
100,000
Number of components
Total
$522,500
The activity-base usage quantities for each product are as follows:
Purchase
Setups
Inspections
Components
Unit Volume
Orders
Custom
500
1,150
2,300
300
1,000
Standard
250
100
200
200
1,000
Total
750
1,250
2,500
500
2,000
a. Determine an activity rate for each activity.
Activity Rates
Production Setup
Procurement
Quality Control
Materials Management
Activity cost
- Activity base
Activity rate
$4
/setup
/PO $
/inspection…
Chapter IE Solutions
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