View the step-by-step solution to:

# Max Williams was worried about his company, Bullwinkle Bottling's recent financial performance. Bullwinkle Bottling showed declining profits over the...

"Problem 3: Prepare a new Monthly Report on Cola Bottling Line, but with your revised indirect cost number of each products." There are three managerial accounting problems that need to be solved at the very bottom of the attached assignment. I will post the assignment three separate times, once for each problem. Please solve only for the problem above.

Page | 2 He then turned to the quietest person in the room- his son, Danny- and said, “I am suspicious of these cost data, Danny. Here we are assigning indirect costs to these products using a 260 percentage rate. I really wonder whether that rate is accurate for all products. I want you to dig into the indirect cost data, figure out what drives those costs and see whether you can give me more accurate cost numbers for these products.” Danny first learned from production that the process required four activities: 1. Setting up production runs 2. Managing production run 3. Managing products 4. Operation of machinery – no labor required. Next, he went to the accounting records to get a breakdown of indirect costs. Here is what he found: Indirect labor 20,000 Fringe benefits on indirect labor 8,000 Information technology 10,000 Machinery depreciation 8,000 Machinery maintenance 4,000 Energy 2,000 Total 52,000 Then, he began a series of interviews with department heads to see how to assign these costs to cost pools. He found that 40% of indirect labor was for scheduling or for handling production runs, including purchasing, preparing the production run, releasing materials for the production run and performing a first-time inspection of the run. Another 50% of indirect labor was used to set up machinery to produce a particular product. The remaining 10% of indirect labor was spent maintaining records for each of the four products, monitoring the supply of raw materials required for each product, and improving the production processes for each product. This 10% of indirect labor was assigned to the cost driver “number of products.” Interviews with people in the information technology department indicated that \$10,000 was allocated to the cola bottling line. Eighty percent of this \$10,000 information technology cost was for scheduling production runs. Twenty percent of the cost was for recordkeeping for each of the four products. Fringe benefits were 40% of labor costs. The rest of the overhead was used to supply machine capacity of 10,000 hours of productive time. Danny then found the following cost driver volumes from interviews with production personnel. Setups 560 labor-hours for setups Production runs 110 production runs Number of products 4 products Machine-hour capacity 10,000 hours
Show entire document
Sign up to view the entire interaction

Dear Student, Thank you for... View the full answer

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

### -

Educational Resources
• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents