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

Almas recording studio rents studio time to musicians in

Alma's Recording Studio rents studio time to musicians in 2-hour blocks. Each session includes the use of the studio facilities, a digital recording of the performance, and a professional music producer/mixer. Anticipate ...

Question 1ryan withdrew cash from the business to pay his

Question 1 Ryan withdrew cash from the business to pay his personal cell phone bill. The expanded accounting equation changes include __________. A. increase in both cash and withdrawal B. decrease in both cash and withd ...

Accounting questionin germany and china separate

Accounting Question: In Germany and China separate institutions established by law carry out the roles of public accounting and auditing. What is the impact of this professional practice on the usefulness of internationa ...

1 what is the beta of a firm whose equity has an expected

1. What is the beta of a firm whose equity has an expected return of 21.30%, the risk-free rate is 7%, and the expected return on the stock market is 18%? 2. Two reasons for the agency problem in modern corporations is: ...

Accountingbullimagine you are a consultant hired to convert

Accounting • Imagine you are a consultant hired to convert a manual accounting system to an automated system. • Suggest the key advantages and disadvantages of automating a manual accounting system. • Identify the most i ...

Question 1the financial statement that shows revenue and

Question 1 The financial statement that shows revenue and expenses for a period of time is the A. balance sheet. B. income statement. C. statement of owner's equity. D. statement of cash flows. Question 2 If a company's ...

Course project a financial statement analysisa comparative

Course Project: A Financial Statement Analysis A Comparative Analysis of Nike, Inc. and Under Armour, Inc. Below is the link for the financial statements for Nike, Inc. for the fiscal year ending 2014. First, select 2014 ...

Shown below is activity for one of the products of denver

Shown below is activity for one of the products of Denver Office Equipment: January 1 balance, 500 units @ $55 $27,500 Purchases January 10 500 units @ $60 January 20 1,000 units @ $63 Sales: January 12 800 units January ...

Del gato clinic deposits all cash receipts on the day when

Del Gato Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2015, its Cash account shows a(n) $14,287 debit balance. Del Gato ...

Discussionsustainable income and ratio analysis please

Discussion "Sustainable Income and Ratio Analysis" Please respond to the following: • Describe sustainable income and the importance of sustainable income in the evaluation of the income statement. Choose at least two it ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen