Solutions Chap 4

Solutions Chap 4 - EXERCISE 4-2(a Traditional costing...

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EXERCISE 4-2 (a) Traditional costing system Product 540X Product 137Y Product 249S Sales $200,000 $160,000 $80,000 Costs 55,000 50,000 15,000 Operating income $145,000 $110,000 $65,000 (b) Activity-based costing system Product 540X Product 137Y Product 249S Sales $200,000 $160,000 $80,000 Costs 50,000 35,000 35,000 Operating income $150,000 $125,000 $45,000 (c) Product 540X: ($150,000 – $145,000) ÷ $145,000 = 3.45% Product 137Y ($125,000 – $110,000) ÷ $110,000 = 13.64% Product 249S ($45,000 – $65,000) ÷ $65,000 = (30.77%) (d) These costs are similar probably because the cost drivers are essentially the same; that is, they are based on a unit volume concept. EXERCISE 4-3
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(a) Activity cost pools Cost drivers Estimated overhead Cutting Machine hours $300,000 Design Number of setups 600,000 Activity-based overhead rates Cutting Design $300,000 = $1.50 per machine hour $600,000 = $400 per setup 200,000 1,500 Wool Cotton Activity-based costing Cutting 100,000 X $1.50 $150,000 100,000 X $1.50
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This homework help was uploaded on 04/19/2008 for the course ACCT 202 taught by Professor Joannm.pinto during the Spring '07 term at Montclair.

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Solutions Chap 4 - EXERCISE 4-2(a Traditional costing...

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