chap17solutions - Chapter 17 Activity-Based Costing and...

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Chapter 17 Activity-Based Costing and Other Cost Management Tools Short Exercises (5-10 min.) S 17-1 3 a. Compute the cost allocation rate for each activity. 2 b. Identify the cost driver for each activity and estimate the total quantity of each driver’s allocation base. 4 c. Allocate indirect costs to the cost object. 1 d. Identify each activity and estimate its total indirect cost. Financial and Managerial Accounting 2/e Solutions Manual 122
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(10 min.) S 17-2 Req. 1 Cost per person = Total costs = $1,210 = $605 Number of people 2 Req. 2 Cost allocation rates: Food = $600 / 50 pounds = $12 per pound Skiing = $210 / 3 lift tickets = $70 per lift ticket Lodging = $400 / 4 nights = $100 per person per night Activities Allocation rate Blake Roscoe Eating $ 12 / pound × 20 $240 × 30 $360 Skiing $70 / ticket × 3 210 × 0 0 Lodging $100/ per night × 2 200 × 2 200 $650 $560 Financial and Managerial Accounting 2/e Solutions Manual 123
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(15 min.) S 17-3 Cost allocation rates: Setup = $107,000 / 100 setups = $1,070 per setup Machine maintenance = $50,000 / 5,000 machine hours = $10 per machine hour ABC indirect manufacturing cost per unit: A B Setup $1,070 × 30 $32,100 × 70 $ 74,900 Machine maintenance $10 × 1,200 12,000 × 3,800 38,000 $44,100 $112,900 Divide by number of units 350 225 Indirect manufacturing cost per unit $126.00 $501.78 Chapter 17 Activity-Based Costing and Other Cost Management Tools 124
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(15 min.) S 17-4 Req. 1 Cost allocation rates: Setup = $55,000 / 50 setups = $1,100 per setup Machine maintenance = $39,000 / 3,500 machine hours = $11.14 per machine hour ABC indirect manufacturing cost per unit: Lo-Gain Hi-Gain Setup $1,100 × 25 $27,500 × 25 $ 27,500 Machine maintenance $11.14 × 2,100 23,394 × 1,400 15,596 $50,894 $43,096 Divide by number of units 200 325 Indirect manufacturing cost per unit $254.47 $132.60 Req. 2 Cost allocation rates: Total indirect manufacturing costs / Total direct labor hours = $94,000 / 7,500 direct labor hours = $12.53 per direct labor hour Single-allocation base indirect manufacturing cost per unit: Lo-Gain = $12.53 per direct labor hour × 1,700 direct labor hours / 200 units = $106.51 per unit Hi-Gain $12.53 per direct labor hour × 5,800 direct labor hours / 325 units = $223.61 per unit Financial and Managerial Accounting 2/e Solutions Manual 125
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(15 min.) S 17-5 ABC indirect manufacturing cost per unit: C D Setup $1,000 × 37 $37,000 × 77 $ 77,000 Machine maintenance $11 × 1,350 14,850 × 3,850 42,350 $51,850 $119,350 Divide by number of units 225 225 Indirect manufacturing cost per unit $230.44 $530.44 ABC Unit product cost: C D Direct materials $900.00 $2,100.00 Direct labor 400.00 200.00 Indirect manufacturing cost 230 .44 530 .44 Product cost per unit $1,530.44 $2,830.44 Chapter 17 Activity-Based Costing and Other Cost Management Tools 126
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(15 min.) S 17-6 ABC indirect manufacturing cost per unit: Mid-Fi Hi-Fi Setup $1,000 × 36 $36,000 × 36 $ 36,000 Inspection $600 × 35 21,000 × 20 12,000
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chap17solutions - Chapter 17 Activity-Based Costing and...

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