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4-40The public accounting firm of Check and Doublecheck preparesthe following condensed annual budget.Illustration 4-16Condensed annualbudget of a servicefirm under traditionalcostingTraditional Costing ExampleLO 4
4-41Assume that Check and Doublecheck records $140,000 of actualdirect professional labor cost during its audit of Plano MoldingCompany, which was billed an audit fee of $260,000. Undertraditional costing, using 50% as the rate for applying overhead tothe job, Check and Doublecheck would compute appliedoverhead and operating income as shown in Illustration 4-16.Traditional Costing ExampleIllustration 4-17LO 4
4-42Check and Doublecheck distributes its estimated annualoverhead costs of $600,000 to three activity cost pools.Activity-Based Costing ExampleIllustration 4-18Condensed annual budget ofa service firm under activity-based costingLO 4
4-43Assigning overhead in a service industry.Activity-Based Costing ExampleIllustration 4-19Assigning overhead ina service companyLO 4
4-44Under activity-based costing, Check and Doublecheck assignsoverhead costs of $57,200 as compared to $70,000 undertraditional costing.Activity-Based Costing ExampleIllustration 4-20Comparison of traditional costingwith ABC in a service companyLO 4
4-454Apply ABC to Service Company(a)Compute the activity-based overhead rates for each pool.LO 4
4-464Apply ABC to Service Company(b)Determine the overhead allocated to Job A1027 which has 150 pieces, requires200 miles of driving, and 0.75 hours of logistics.(150 x $0.70) + (200 x $0.50) + (0.75 x $30) =$227.50LO 4
4-47In-class assignmentGroups of 2 or 3, work on P4-5A (page136) for 25 minutes after which we willgo over.Write down your answers as I will callon you.
4-48JIT manufacturing is dedicated to having the right amount of materials,parts, or products just as they are needed..Illustration 4A-1LEARNINGOBJECTIVE5APPENDIX 4A: Explain just-in-time (JIT)processing.LO 5
4-49Objective of JIT ProcessingTo eliminate all manufacturing inventories.Elements of JIT ProcessingDependable suppliers.Multiskilled work force.Total quality control system.LEARNINGOBJECTIVE5APPENDIX 4A: Explain just-in-time (JIT)processing.LO 5
4-50Benefits of JIT ProcessingSignificant reduction or elimination of manufacturinginventories.Enhanced product quality.Reduction or elimination of rework costs and inventorystorage costs.Production cost savings from the improved flow of goodsthrough the processes.LEARNINGOBJECTIVEAPPENDIX 4A: Explain just-in-time (JIT)processing.5LO 5
4-51In-class assignmentGroups of 2 or 3, work on BYP4-2 (page137) for 25 minutes after which we willgo over.Write down your answers.
4-52Practice quizThese are the kinds of questionsthat will be on the final exam.
4-53For Day 5Read Chapter 5. Go throughPractice Exercises (page 158)and Practice Problem (page160) at end of chapter.