Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 5.23E
ABC,
| Mathematical | Financial | |
| Annual production in units | 45,000 | 90,000 |
| Direct material costs | $180,000 | $360,000 |
| Direct manufacturing labor costs | $ 90,000 | $180,000 |
| Direct manufacturing labor-hours | 4,500 | 9,000 |
| Machine-hours | 30,000 | 60,000 |
| Number of production runs | 45 | 45 |
| Inspection hours | 1,200 | 600 |
Total manufacturing
| Total | |
| Machining costs | $360,000 |
| Setup costs | 108,000 |
| Inspection costs | 117,000 |
- 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.
Required
- 2. Compute the
manufacturing cost per unit for each product. - 3. How might Sander’s managers use the new cost information from its activity-based costing system to better manage its business?
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Kesterson Corporation has provided the following information:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Sales commissions
Variable administrative expense
Fixed selling and administrative expense
Cost per
Unit
$ 6.30
$ 3.30
$ 1.25
$ 1.30
$ 0.60
Cost per
Period
$ 15,000
$ 4,200
If 7,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
2. Lalila Furnitures produces communicator table and coffee table and operates at capacity. Data related
to the two products are presented here:
Annual production in units
Direct material costs
Direct manufacturing labor costs
Direct manufacturing labor-hours
Machine-hours
Number of production runs
Inspection hours
Total manufacturing overhead costs are as follows:
RM
Machining costs
Setup costs
Inspection costs
Coffee table
50,000
150,000
50,000
2,500
25,000
50
1,000
375,000
120,000
105,000
Communicator table
100,000
300,000
100,000
5,000
50,000
50
500
a. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per
unit for each product.
b. Compute the manufacturing cost per unit for each product.
Consider the following production and cost data for two products, X and Y, manufactured by Company.
Product X
Product Y
Sales price per unit
$52
$40
Direct materials cost per unit
$18
$8
Direct labor hours per unit
1.5
1.0
Machine hours per unit
3.0
2.0
The labor rate is $10 per hour.
Variable overhead is $2 per direct labor hour.
The company can hire sufficient labor for any production level.
The company has 15,000 machine hours available each period.
There is unlimited demand for each product.
Assuming a company has achieved a reasonable level of cost accuracy, what is the most important determinant of whether cost information should be even more accurate?
Chapter 5 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 5 - What is broad averaging, and what consequences can...Ch. 5 - Why should managers worry about product...Ch. 5 - What is costing system refinement? Describe three...Ch. 5 - What is an activity-based approach to designing a...Ch. 5 - Describe four levels of a cost hierarchy.Ch. 5 - Why is it important to classify costs into a cost...Ch. 5 - What are the key reasons for product cost...Ch. 5 - Prob. 5.8QCh. 5 - Department indirect-cost rates are never...Ch. 5 - Prob. 5.10Q
Ch. 5 - Prob. 5.11QCh. 5 - Prob. 5.12QCh. 5 - Activity-based costing is the wave of the present...Ch. 5 - Increasing the number of indirect-cost pools is...Ch. 5 - The controller of a retail company has just had a...Ch. 5 - Conroe Company is reviewing the data provided by...Ch. 5 - Prob. 5.17MCQCh. 5 - Cost hierarchy. Roberta, Inc., manufactures...Ch. 5 - ABC, cost hierarchy, service. (CMA, adapted)...Ch. 5 - Alternative allocation bases for a professional...Ch. 5 - Plant-wide, department, and ABC Indirect cost...Ch. 5 - Plant-wide, department, and activity-cost rates....Ch. 5 - ABC, process costing. Sander Company produces...Ch. 5 - Department costing, service company. DLN is an...Ch. 5 - Activity-based costing, service company....Ch. 5 - Activity-based costing, manufacturing. Decorative...Ch. 5 - ABC, retail product-line profitability. Fitzgerald...Ch. 5 - Prob. 5.28ECh. 5 - Activity-based costing. The job-costing system at...Ch. 5 - ABC, product costing at banks,...Ch. 5 - Problems 5-31 Job costing with single direct-cost...Ch. 5 - Job costing with multiple direct-cost categories,...Ch. 5 - Job costing with multiple direct-cost categories,...Ch. 5 - First-stage allocation, time-driven activity-based...Ch. 5 - First-stage allocation, time-driven activity-based...Ch. 5 - Department and activity-cost rates, service...Ch. 5 - Activity-based costing, merchandising. Pharmahelp,...Ch. 5 - Choosing cost drivers, activity-based costing,...Ch. 5 - ABC, health care. Crosstown Health Center runs two...Ch. 5 - Unused capacity, activity-based costing,...Ch. 5 - Unused capacity, activity-based costing,...Ch. 5 - ABC, implementation, ethics. (CMA, adapted) Plum...Ch. 5 - Activity-based costing, activity-based management,...
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