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# 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
(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
(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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