Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Assume that one of ITW's divisions has the following predicted indirect costs and cost drivers for 2013 for the given activity cost pools:

FABRICATION FINISHING
DEPARTMENT DEPARTMENT COST DRIVER

Maintenance $20,000 $10,000 Machine hours
Materials Handling 30,000 15,000 Material Moves Machine Setups 70,000 5,000 Machine Setups
Inspections -0- 25,000 Inspection hours

The following activity predictions were also made for the year:

FABRICATION FINISHING
DEPARTMENT DEPARTMENT
Machine hours 10,000 5,000
Materials moves 3,000 1,500
Machine setups 700 50
Inspection hours -0- 1,000

It is assumed that the cost per unit of activity for a given activity does not vary between departments.

Suppose ITW's divisional manager is trying to evaluate the company's product mix strategy regarding two of its five product modes, COBRA and ASP. The company has been using a plant-wide overhead rate based on machine hours but is considering switching to either department rates or activity based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models:

COBRA ASP
Direct materials cost $12,000 $18,000
Direct labor cost 5,000 4,000
Machines hours (Fabrication) 500 700
Machine hours (Finishing) 200 100
Material moves 30 50
Machine setups 5 9
Inspection hours 30 60

REQUIRED:
A. Determine the cost of one unit of Cobra and Asp, assuming a plant-wide overhead rate is used based on total machine hours.
B. Determine the cost on one unit of Cobra and Asp, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments.
C. Determine the cost of one unit of Cobra and Asp, assuming activity based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities.
D. prepare a short report for management regarding the results of these calculations.

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M939234

Have any Question? 


Related Questions in Accounting Basics

Accounting amp the regulatory environmentin the wake of the

Accounting & The Regulatory Environment In the wake of the accounting and finance scandals of the early 2000s, the regulatory environment for businesses changed dramatically to create more accountability and transparency ...

Problem 1 - on may 1 2014 abc corporation purchased

Problem 1 - On May 1, 2014, ABC Corporation purchased equipment for $60,000 by issuing a one-year, 4% note payable, with interest to be paid at maturity on May 1, 2015. The company routinely depreciates its equipment ove ...

Where does the researcher finda authoritative us gaap

Where does the researcher find: a. Authoritative U.S. GAAP sources? b. Non authoritative U.S. GAAP sources?

1 match the following definitions to the appropriate

1. Match the following definitions to the appropriate terms. Potential Matches: 1 : Due professional care 2 : Sufficient understanding of internal control 3 : Adequacy of informative disclosures Answer : Standards of fie ...

A lorge corporation has collected the following information

A Lorge Corporation has collected the following information after its first year of sales. Sales... Description A Lorge Corporation has collected the following information after its first year of sales. Sales were $1,500 ...

Practice questionsindicate which of the following costs

Practice questions: Indicate which of the following costs that are incurred in a manufacturing company are production costs, selling and distribution costs or administration costs: • Motor vehicles' licences • Depreciati ...

Review the form 10-k for the company selected for team

Review the Form 10-K for the company selected for team assignments Write a 1,050- to 1,400-word paper on the following: 1. Management's Report on Internal Control Over Financial Reporting 2. The Independent Registered Pu ...

Classifying costs as materials labor or factory overhead

Classifying costs as materials, labor, or factory overhead Indicate whether each of the following costs of an automobile manufacturer would be classified as direct materials cost, direct labor cost, or factory overhead c ...

You are an accountant at wcp accountants and investment

You are an accountant at WCP Accountants and Investment Advisers. You have been approached by a client for your professional advice on investing in Woolworths Ltd. Your client supports Australian made products. Your clie ...

Question -owing to low liquidity lisa ltd decides on 1 july

Question - Owing to low liquidity, Lisa Ltd decides on 1 July 2015 to sell its land and buildings to Anderson Ltd. The carrying values of the land and buildings in the books of Lisa Ltd, at 1 July 2015, are: Land at Cost ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate