Hello Rocky4ever could you help me with my homework again? 7


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Hello Rocky4ever could you help me with my homework again? 7 questions, same price?? Chapter 5 homework.docx Chapter 5 Homework Exercises 5-19. Plant-wide, department, and ABC indirect cost rates. Automotive products (AP) designs and produces automotive parts. In 2014, actual variable manufacturing overhead is $308,600. AP’s simple costing system allocates variable manufacturing overhead to its three customers based on machinehours and prices its contracts based on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so AP’s controller Devon Smith realizes that it is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that consume overhead resources: design, production and engineering. Interviews with the department personnel and examination of time records yield the following detailed information. Department Design Production Engineering Total Cost Driver CAD-design-hours Engineering-hours Machine-hours Manufacturing Overhead in 2014 $ 39,000 29,600 240,000 $ 308,600 Usage of Cost Drivers by Customer Contract United Holden Leland Motors Motors Auto 110 200 80 70 60 240 120 2800 1080 1. Compute the manufacturing overhead allocated to each customer in 2014 using the simple costing system that uses machine-hours as the allocation base. 2. Compute the manufacturing overhead allocated to each customer in 2014 using department-based manufacturing overhead rates. 3. Comment on your answers in requirement 1 and 2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contracts, which customer(s) will be unhappy? How would you respond to these concerns? 4. How else might AP use the information available from its department-by-department analysis of manufacturing overhead costs? 5. AP’s managers are wondering if they should further refine the department-by-department costing system into an ABC system by identifying different activities within each department. Under what conditions would it not be worth wile to further refine the department costing system into an ABC system? 5-20 Plant-wide, department, and activity-cost rates. Triumph Trophies makes trophies and plaques and operates at capacity. Triumph does large custom orders, such as the participant trophies for the Minnetonka Little League. The controller has asked you to compare plant-wide, department, and activity based cost allocation. Triumph Trophies Budgeted Information for the Year Ended November 30, 2014 Forming Department Trophies Plaques Total Direct Materials $26,000 $22,500 $48,500 Direct manufacturing-labor Overhead Costs Set up Supervision Assembly Department Direct materials Direct Manufacturing labor Overhead costs Set up Supervision 31,200 18,000 Trophies 49,200 Plaques $5,200 15,600 $18,750 21,000 24,000 20,772 Total $23,950 36,600 46,000 21,920 Other information follows: Setup costs in each department vary with the number of batches processed in each department. The budgeted number of batches for each product line in each department as follows: Trophies Forming department Assembly department Plaques 40 43 116 103 Supervision costs in each department vary with direct manufacturing labor costs in each department. 1. Calculate the budgeted cost of trophies and plaques based on a single plant-wide overhead rate, if total overhead is allocated based on total direct costs. 2. Calculate the budgeted cost of trophies and plaques based on departmental overhead rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct costs of the assembly department. 3. Calculate the budgeted cost of trophies and plaques if Triumph allocates overhead costs in each department using activity-based costing. 4. Explain

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