Ask Question, Ask an Expert


Ask Accounting Basics Expert

Management assembled a cross-functional team to design a prototype ABC system. Electrical costs were among the first factory overhead costs investigated by the team. Electricity is used to provide light, to power equipment, and to heat the building in the winter. The ABC team proposed allocating electrical costs to jobs based on machine-hours since running the machines consumes significant amounts of electricity. Data assembled by the team concerning actual direct labour-hours, machine hours, and electrical costs over a recent eight-week period have been entered into the spreadsheet that appears below. (The Swiss currency is the Swiss franc, which is denoted by SFr.)

To help assess the effect of the proposed change to machine-hours as the allocation base, the above eight-week totals were converted to annual figures by multiplying them by six.

1. Assume that the estimated annual totals shown above are used to compute the company's predetermined overhead rate. What would be the predetermined overhead rate for electrical costs if the allocation base is direct labour-hours? Machine-hours?
2. Management intends to bid on a job for a set of custom tools for a watchmaker that would require 30 direct labor-hours and 25 machine-hours. How much electrical cost would be charged to this job using the predetermined overhead rate computed in part (1) above if the allocation base is direct labour-hours? machine-hours?
3. What factors, apart from direct labour-hours and machine-hours, are likely to affect consumption of electrical power in the company?


Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M942076

Have any Question? 

Related Questions in Accounting Basics

Dq1respond to the ethics discussion case at the end of

DQ1 Respond to the Ethics Discussion Case at the end of chapter 13 in the textbook. Assume that you are a CPA and a tax specialist. Your clients include Ale and Grains, Inc., an S corporation, and Gustav and Heidi Lager, ...

Harmon helmets purchased equipment for 62000 cash sold

Harmon Helmets purchased equipment for $62,000 cash, sold equipment costing $36,000 with a book value of $22,000 at a loss, and declared dividends during 2013. No new notes payable were issued during the year. Financial ...

Question 1abc inc has estimated the following revenues and

Question 1 ABC Inc. has estimated the following revenues and expenses related phase I of a proposed new housing development? Incremental sales= $5,081,953, total cash expenses $3,212,751, depreciation $623,167, taxes 33% ...

Question 1a firms legal capital is defined as the par value

Question 1 A firm's legal capital is defined as the par value of its common stock. The following table represents a scaled version of the equity account of FIRM XYZ: Common stock at par R 136586 Paid-in capital in excess ...

Accounting discussionbulldiscuss the advantages of

Accounting Discussion • Discuss the advantages of understanding accounting as it relates to your current or future position. (Consider careers in management, sales, business operations, finance, and business ownership.)

Key information for the plant city divisionkey information

Key Information For The Plant City Division Key information for the Plant City Division (PCD) of Barkley Industries for 2015 are as follows: Revenues $15,000,000 Operating Income 1,800,000 Total Assets 10,000,000 PCD man ...

Decide upon an initiative you want to implement that would

Decide upon an initiative you want to implement that would increase sales over the next five years, (for example, market another product, corporate expansion, and so on). Using the sample financial statements, create pro ...

Company name bhp billiton - report 2000-2200

Company Name BHP Billiton - Report (2000-2200) words Introduction Approach of research study What they have done wrong which results in the crisis Issues in sustainability report Issues in what they claim of doing but th ...

Problem -the stay healthy medical clinics balance sheet on

Problem - The Stay Healthy Medical Clinic's Balance sheet on December 31, 2014 showed an owner's equity of $1,280,000. The December 31, 2015 balance sheet showed an owner's equity of $1,520,000. During the year, the owne ...

Review the provisions of the sarbanes-oxley act of 2002 to

Review the provisions of the Sarbanes-Oxley Act of 2002 to address the accounting scandals in the late 1990s and early 2000s (Enron, WorldCom, etc.). Identify the provisions that you believe made the most significant imp ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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