Required information[The following information applies to the questions displayed below.]Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system hasthe following seven activity cost pools:EstimatedOverhead Cost$ 26,800Expected Activity5,000 direct labor-hours9,000 machine-hours.1,100 setupsActivity Cost PoolLabor-relatedMachine-related$ 4,500Machine setups$ 41,800Production orders$ 17,000Product testing$ 15,500Packaging$ 51,000General factory$ 52,4005,000 direct labor-hours500 orders500 tests3,400 packages2. Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predeterminedoverhead rate based on direct labor-hours. (Round your answer to 2 decimal places.)Predetermined overhead rateper DLH

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Description: Required information[The following information applies to the questions displayed below.]Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system hasthe following seven activity cost pools:Es

Predetermined Overhead Rate :— It is the rate used to allocate manufacturing overhead cost to cost…

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Required information [The following information applies to the questions displayed below] Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has the following seven activity cost pools: Activity Cost Pool Labor-related Estimated Overhead Cost $ 26,800 Expected Activity 5,000 direct labor-hours 9,000 machine-hours 1,100 setups 500 orders Machine-related $ 4,500 Machine setups $ 41,800 Production orders $ 17,000 Product testing $ 15,500 Packaging $ 51,000 3,400 packages General factory $ 52,400 5,000 direct labor-hours 500 tests Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined erhead rate based on direct labor-hours. (Round your answer to 2 decimal places.) edetermined overhead rate per DLH

Required information [The following information applies to the questions displayed below] Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has the following seven activity cost pools: Activity Cost Pool Labor-related Estimated Overhead Cost $ 26,800 Expected Activity 5,000 direct labor-hours 9,000 machine-hours 1,100 setups 500 orders Machine-related $ 4,500 Machine setups $ 41,800 Production orders $ 17,000 Product testing $ 15,500 Packaging $ 51,000 3,400 packages General factory $ 52,400 5,000 direct labor-hours 500 tests Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined erhead rate based on direct labor-hours. (Round your answer to 2 decimal places.) edetermined overhead rate per DLH

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter5: Product And Service Costing: Job-order System

Section: Chapter Questions

Problem 24E: Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs....

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The following product costs are available for Stellis Company on the production of erasers: direct materials, $22,000; direct labor, $35,000; manufacturing overhead, $17,500; selling expenses, $17,600; and administrative expenses; $13,400. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 13,750 equivalent units are produced, what is the equivalent material cost per unit? If 17,500 equivalent units are produced, what is the equivalent conversion cost per unit?
Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units of Simple and 146,100 of Removable, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: Â How much is the overhead allocated to each unit of Simple and Removable?
A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
Cool Pool has these costs associated with production of 20,000 units of accessory products: direct materials, $70; direct labor, $110; variable manufacturing overhead, $45; total fixed manufacturing overhead, $800,000. What is the cost per unit under both the variable and absorption methods?
Evans, Inc., has a unit-based costing system. Evanss Miami plant produces 10 different electronic products. The demand for each product is about the same. Although they differ in complexity, each product uses about the same labor time and materials. The plant has used direct labor hours for years to assign overhead to products. To help design engineers understand the assumed cost relationships, the Cost Accounting Department developed the following cost equation. (The equation describes the relationship between total manufacturing costs and direct labor hours; the equation is supported by a coefficient of determination of 60 percent.) Y=5,000,000+30X,whereX=directlaborhours The variable rate of 30 is broken down as follows: Because of competitive pressures, product engineering was given the charge to redesign products to reduce the total cost of manufacturing. Using the above cost relationships, product engineering adopted the strategy of redesigning to reduce direct labor content. As each design was completed, an engineering change order was cut, triggering a series of events such as design approval, vendor selection, bill of materials update, redrawing of schematic, test runs, changes in setup procedures, development of new inspection procedures, and so on. After one year of design changes, the normal volume of direct labor was reduced from 250,000 hours to 200,000 hours, with the same number of products being produced. Although each product differs in its labor content, the redesign efforts reduced the labor content for all products. On average, the labor content per unit of product dropped from 1.25 hours per unit to one hour per unit. Fixed overhead, however, increased from 5,000,000 to 6,600,000 per year. Suppose that a consultant was hired to explain the increase in fixed overhead costs. The consultants study revealed that the 30 per hour rate captured the unit-level variable costs; however, the cost behavior of other activities was quite different. For example, setting up equipment is a step-fixed cost, where each step is 2,000 setup hours, costing 90,000. The study also revealed that the cost of receiving goods is a function of the number of different components. This activity has a variable cost of 2,000 per component type and a fixed cost that follows a step-cost pattern. The step is defined by 20 components with a cost of 50,000 per step. Assume also that the consultant indicated that the design adopted by the engineers increased the demand for setups from 20,000 setup hours to 40,000 setup hours and the number of different components from 100 to 250. The demand for other non-unit-level activities remained unchanged. The consultant also recommended that management take a look at a rejected design for its products. This rejected design increased direct labor content from 250,000 hours to 260,000 hours, decreased the demand for setups from 20,000 hours to 10,000 hours, and decreased the demand for purchasing from 100 component types to 75 component types, while the demand for all other activities remained unchanged. Required: 1. Using normal volume, compute the manufacturing cost per labor hour before the year of design changes. What is the cost per unit of an average product? 2. Using normal volume after the one year of design changes, compute the manufacturing cost per hour. What is the cost per unit of an average product? 3. Before considering the consultants study, what do you think is the most likely explanation for the failure of the design changes to reduce manufacturing costs? Now use the information from the consultants study to explain the increase in the average cost per unit of product. What changes would you suggest to improve Evanss efforts to reduce costs? 4. Explain why the consultant recommended a second look at a rejected design. Provide computational support. What does this tell you about the strategic importance of cost management?
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Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the purchase of materials, the completion of goods, and the sale of goods. Prepare journal entries to account for the following: a. Purchased raw materials, on account, 70,000. b. Requisitioned raw materials to production, 70,000. c. Distributed direct labor costs, 15,000. d. Factory overhead costs incurred, 45,000. (Use Various Credits for the account in the credit part of the entry.) e. Completed all of the production started. f. Sold the completed production for 195,000, on account. (Hint: Use a single account for raw materials and work in process.)
Rocks Industries has two products. They manufactured 12,539 units of product A and 8.254 units of product B. The data are: Â What is the activity rate for each cost pool?
Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data were compiled by the accountants before making any allocations: The total cost of purchasing and receiving parts used in manufacturing is 60,000. The company uses a job-costing system with a single indirect cost rate. Under this system, allocated costs were 48,000 and 12,000 for X and Y, respectively. If an activity-based system is used, what would be the allocated costs for each product?
Required information [The following information applies to the questions displayed below.] Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity- based costing system has the following seven activity cost pools: Activity Cost Pool Labor-related Machine-related Machine setups Production orders Product testing Packaging General factory Estimated Overhead Cost $ 16,400 $5,000 $ 20,500 $ 19,000 $ 21,700 Predetermined overhead rate $ 36,000 $ 53,600 Expected Activity 10,000 direct labor-hours 10,000 machine-hours per DLH 500 setups 500 orders 700 tests 2. Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined overhead rate based on direct labor-hours. (Round your answer to 2 decimal places.) 3,600 packages 10,000 direct labor-hours
Required information [The following information applies to the questions displayed below.] Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has the following seven activity cost pools: Activity Cost Pool Labor-related Machine-related Machine setups Production orders Product testing Packaging General factory Activity Cost Pool Labor-related Machine-related Estimated Overhead Cost $ 52,000 $ 15,000 $ 42,000 $ 18,000 Machine setups Production orders Product testing Packaging General factory $ 48,000 $ 75,000 $ 108,800 Required: 1. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Rate per DLH per MH per setup per order per test per package per DLH Expected Activity 8,000 direct labor-hours 20,000 machine-hours 1,000 setups 500 orders 2,090 tests 5,90 packages 8,000 direct labor-hours