cost ch3 - 31 Activity a. Machining b. Assembling c....

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3–1 Activity Cost Behavior Driver a. Machining Variable Machine hours b. Assembling Variable Units produced c. Selling goods Fixed Units sold d. Selling goods Variable Units sold e. Moving goods Variable Number of moves f. Storing goods Fixed Square feet g. Moving materials Fixed Number of moves h. X-raying patients Variable Number of x-rays i. Transporting clients Mixed Miles driven j. Repairing teeth Variable Number of fillings k. Setting up equipment Mixed Number of setups l. Filing claims Variable Number of claims m. Maintaining equipment Mixed Maintenance hours n. Selling products Variable Number of circulars o. Purchasing goods Mixed Number of orders 3–2 1. Driver for overhead activity: Number of speakers 2. Total overhead cost = $175,000 + $1.10(70,000) = $252,000 3. Total fixed overhead cost = $175,000 4. Total variable overhead cost = $1.10(70,000) = $77,000 5. Unit cost = $252,000/70,000 = $3.60 per unit 6. Unit fixed cost = $175,000/70,000 = $2.50 per unit 7. Unit variable cost = $1.10 per unit 8. a. and b. 50,000 Units 100,000 Units Unit cost a $4.60 $2.85 Unit fixed cost b 3.50 1.75 Unit variable cost c 1.10 1.10 a [$175,000 + $1.10(50,000)/50,000]; [$175,000 + $1.10(100,000)/100,000]. b $175,000/50,000; $175,000/100,000. c ($4.60 – $3.50); ($2.85 – $1.75). The unit cost increases in the first case and decreases in the second. This is because fixed costs are spread over fewer units in the first case and over more units in the second. The unit variable cost stays constant. 3–5 1. Committed resources: Lab facility, equipment, and salaries of technicians Flexible resources: Chemicals, photo paper, envelopes, and supplies
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2. Depreciation on lab facility = $330,000/20 = $16,500 Depreciation on equipment = $592,500/5 = $118,500 Total salaries for technicians = 5 × $15,000 = $75,000 Total processing rate = ($16,500 + $118,500 + $75,000 + $400,000)/100,000 = $6.10 per roll Variable activity rate = $400,000/100,000 = $4.00 per roll Fixed activity rate = ($16,500 + $118,500 + $75,000)/100,000 = $210,000/100,000 = $2.10 per roll 3. Activity availability = Activity usage + Unused activity Film capacity available = Film capacity used + Unused film capacity 100,000 rolls = 96,000 rolls + 4,000 rolls 4. Cost of activity supplied = Cost of activity used + Cost of unused activity Cost of activity supplied = Cost of 96,000 rolls + Cost of 4,000 rolls [$210,000 + ($4 × 96,000)] = ($6.10 × 96,000) + ($2.10 × 4,000) $594,000 = $585,600 + $8,400 Note: The analysis is restricted to resources acquired in advance of usage. Only this type of
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cost ch3 - 31 Activity a. Machining b. Assembling c....

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