All necessary calculations are on the attached excel sheet
QUESTION 6:
Sala Corporation uses the weighted-average method in its process costing system. The Fitting Department is the second
department in its production process. The data below summarize the department's operations in March.
Beginning work in process inventory
Transferred in from the prior department
during March
Ending work in process inventory
Units
9,500
Percent Complete with
Respect to Conversion
30%
45,000
3,700
80%
The Fitting Department's cost per equivalent unit for conversion cost for March was $2.44.
How much conversion cost was assigned to the units transferred out of the Fitting Department during March?
-2-2
$131,174.4
$109,800
$123,952
$132,980
Units in Beginning Inventory
Add: Units Started into Production
Less: Units in Ending Inventory
Units Transferred Out
Cost per Equivalent Unit
Conversion Cost Assigned to Units Transferred Out
9,500
45,000
3,700
50,800
× $2.44
$123,952
QUESTION 7:
Sumter Company uses the weighted-average method in its process costing system. The following data pertain to operations
in the first processing department for a recent month:
Work in process, beginning:
Units in process
Percent complete with respect to materials
Percent complete with respect to conversion
Costs in the beginning inventory:
Materials cost
Conversion cost
Units started during the month
Units completed and transferred out during the month
Costs added to production during the month:
Materials cost
Conversion cost
Work in process, ending:
5,900
70%
30%
$76,400
$2,900
?
70,200
$293,968
$198,524
Units in process
Percent complete with respect to materials
Percent complete with respect to conversion
8,700
80%
35%
How many units were started into production during the month?
-2-2
55,600 units
67,400 units
84,800 units
73,000 units
QUESTION 9:
Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is
sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. (The
Mexican currency is the peso and is denoted by $.) The first stage in the production process is carried out in the Mixing
Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The
company uses the weighted-average method in its process costing system. A hastily prepared report for the Mixing Department
for April appears below:
Units to be accounted for:
Work in process, April 1 (materials 90%
complete; conversion 80% complete)
Started into production
Total units to be accounted for
Units accounted for as follows:
Transferred to next department
Work in process, April 30 (materials 75%
complete; conversion 50% complete)
Total units accounted for
Cost Reconciliation
Cost to be accounted for:
Work in process, April 1
Cost added during the month
Total cost to be accounted for
Cost accounted for as follows:
Work in process, April 30
Transferred to next department
Total cost accounted for
6,000
34,000
40,000
24,000
16,000
40,000
$16,100
84,800
$100,900
7,800
$93,100
$100,900
Management would like some additional information about Cooperative San José's operations.
Requirement 1:
What were the equivalent units for the month?
Materials
Equivalent units of production
36,000 , and 32,000
Conversion
Physical
Units
Quantities
Equivalent Units
Materials Conversion
Units to be accounted for
Work in Process, Beginning
6,000
Started into Production
34,000
Total Units
Units Accounted for
40,000
Transferred Out
24,000
24,000
24,000
WIP, Ending
16,000
12,000
8,000
Total Units
40,000
36,000
32,000
Requirement 2:
What were the costs per equivalent unit for the month? The beginning inventory consisted of the following costs: materials,
$11,000 and conversion cost, $5,100. The costs added during the month consisted of: materials, $52,000; and conversion cost,
$32,800. (Round your answers to 2 decimal places. Omit the "$" sign in your response)
Materials
Cost per equivalent unit
$
Conversion
$
$1.75 , $1.18
Cost per Equivalent Unit
Unit Costs
Material
Conversion
Total
WIP
11,000
5,100
16,100
Costs in Month
52,000
32,800
84,800
Total Cost
63,000
37,900
100,900
Equivalent Units
36,000
32,000
Unit Costs
1.75
1.18
2.93
Requirement 3:
How many of the units transferred to the next department were started and completed during the month?
Units started and completed during April
Started and completed = 18,000
Requirement 4:
The manager of the Mixing Department stated, "Materials prices jumped from about $1.50 per unit in March to $3.00 per unit in
April, but due to good cost control I was able to hold our materials cost to less than $3.00 per unit for the month." Should this
manager be rewarded for good cost control?
No. The manager should not be rewarded. In weighted average method, the costs of
prior period get mixed with the costs of current period. Thus if cost is March is $1.50
and in April it is $3.00, the average cost would be less than $3.00 in the weighted
average method.
QUESTION 10:
Testing a prototype of a new product is an example of a:
-2-2
Unit-level activity.
Product-level activity.
Organization-sustaining activity.
Batch-level activity.
QUESTION 11:
Kraska Corporation has provided the following data from its activity-based costing system:
Activity Cost Pool
Assembly
Processing orders
Inspection
Total Cost
$455,000
$33,740
$108,348
Total Activity
36,000 machine-hours
960 orders
1,320 inspection-hours
Data concerning one of the company’s products, Product O11W, appear below:
Selling price per unit
Direct materials cost per unit
Direct labor cost per unit
Annual unit production and sales
Annual machine-hours
Annual orders
Annual inspection-hours
$96.0
$16.8
$13.0
370.0
880.0
85.0
22.0
According to the activity-based costing system, the product margin for product O11W is (round activity rates to 2 decimal
places):
-2-2
$6,798.43
$1,428.00
$8,578.58
$4,810.00
QUESTION 12:
Kassabian Corporation uses an activity-based costing system with three activity cost pools. The company has provided the
following data concerning its costs and its activity based costing system:
Costs:
Wages and salaries
Depreciation
Utilities
Total
$500,000
226,000
235,000
$961,000
Distribution of resource consumption:
Wages and salaries
Depreciation
Utilities
Assembly
50%
20%
25%
Activity Cost Pools
Setting Up
Other
30%
20%
40%
40%
35%
40%
Total
100%
100%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?
-2-2
$384,400
$250,000
$115,250
$353,950
Total Assembly Cost:
Wages and Salaries: 50% × $500,000
$250,000
Depreciation: 20% ×$226,000
$45,200
Utilities: 25% × $235,000
$58,750
Total
$353,950
QUSTION 13:
Worker recreational facilities is an example of a cost that would ordinarily be considered to be:
Organization-sustaining.
Unit-level.
Batch-level.
Product-level.
QUESTION 14:
Grodin Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the
activity rates in its activity-based costing system:
Wages
Supplies
Other expenses
Activity Cost Pools
Preparing
Arranging
Meals
Functions
$2.5
$310
$1.25
$230
$1.25
$210
The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions
catered is used as the activity measure for the Arranging Functions activity cost pool.
Management would like to know whether the company made any money on a recent function at which 360 meals were served.
The company catered the function for a fixed price of $33 per meal. The cost of the raw ingredients for the meals was $18.65 per
meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above.
For the purposes of preparing action analyses, management has assigned ease of adjustment codes to the costs as follows: wages
are classified as a Yellow cost; supplies and raw ingredients as a Green cost; and other expenses as a Red cost.
Suppose an action analysis report is prepared for the function mentioned above. What would be the "red margin" in the action
analysis report? (Round to the nearest whole dollar.)
-2-2
$2,466
$2,766
$2,516
$2,616
Sales (360 × $33)
Green Costs:
Supplies & Raw Ingredients (360 × $19.90) + $230
Green Margin
Yellow Cost:
Wages (360 × $2.5) + $310
Yellow Margin
Red Costs:
Other Expenses (360 × $1.25) + $210
Red Margin
QUESTION 15:
If a cost object such as a product or customer has a positive green margin, then:
-2-2
its red margin may be either positive, negative, or zero.
its red margin will be zero.
its red margin will be positive.
its red margin will be negative.
$11,880
$7,394
$4,486
$1,210
$3,276
$660
$2,616
QUESTION 16:
Fordham Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the
following data concerning its annual overhead costs and its activity based costing system:
Overhead costs:
Wages and salaries
Other expenses
Total
$ 105,000
45,000
$150,000
Distribution of resource consumption:
Activity Cost Pools
Wages and salaries
Other expenses
Making
Bouquets
70%
45%
Delivery
20%
25%
Other
10%
30%
Total
100%
100%
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The amount of activity for the year is as follows:
Activity Cost Pool
Activity
Making bouquets
29,000 bouquets
Delivery
3,600 deliveries
What would be the total overhead cost per delivery according to the activity based costing system? In other words, what
would be the overall activity rate for the "Deliveries" activity cost pool? (Round your answer to 2 decimal places.)
-2-2
$2.92
$5.83
$8.96
$4.02
Delivery Cost:
Wages and salaries: 20% × $105,000 ................................................
$21,000
Other expenses: 25% × $45,000.........................................................
11,250
Total ...................................................................................................
$32,250
Activity Cost Pool
Delivery
(a)
Total Cost
$32,250
(b)
Total Activity
3,600 deliveries
(a) ÷ (b)
Activity Rate
$8.96 per delivery
QUESTION 17:
Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product
lines appear below:
Selling price per unit
Direct materials per unit
Direct labor per unit
Direct labor-hours per unit
Estimated annual production
Xtreme
$144
$65
$20
2 DLHs
11,000 units
Pathfinder
$106
$40
$20
2 DLHs
61,000 units
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours.
Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
Estimated total manufacturing overhead
Estimated total direct labor-hours
$2,260,800
144,000 DLHs
Requirement 1:
(a) Calculate the predetermined overhead rate. (Round your answer to 2 decimal places. Omit the "$" sign in your
response.)
Predetermined overhead rate

$
$2, 260,800
=$15.7
144, 000
(b) Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.
(Negative amount should be indicated by a minus sign. Round predetermined overhead rate to 2 decimal places.
Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)
Xtreme
Product margin
Pathfinder
$
Total
$
$
Requirement 2:
The company is considering replacing its traditional costing system with an activity-based costing system that would assign its
manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and
idle capacity costs):
Expected Activity
Estimated
Overhead cost
$796,320
486,300
602,100
376,080
$2,260,800
Activities and Activity Measures
Supporting direct labor (direct labor-hours)
Batch setups (setups)
Product sustaining (number of products)
Other
Total manufacturing overhead cost
Xtreme
22,000
150
1
NA
Pathfinder
122,000
150
1
NA
Total
144,000
300
2
NA
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative
amount should be indicated by a minus sign. Omit the "$" sign in your response.)
Xtreme
Product margin
Pathfinder
$
Total
$
$
Requirement 3:
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your percentage values to
one decimal place and round all other values to the nearest whole number. Omit the "$" & "%" signs in your response.)
Xtreme
Traditional Cost System
Amount
Pathfinder
%
%
Total
Amount
Direct materials
$
%
Direct labor
Manufacturing overhead
Total cost assigned to products
$
%
%
%
%
%
$
$
$
$
Activity-Based Costing System
Direct costs:
Direct materials
$
%
Direct labor
$
%
%
%
%
%
%
%
%
%
$
Indirect costs:
Supporting direct labor
Batch setups
Product sustaining
Total cost assigned to products
$
$
$
Costs not assigned to products:
Other
Total cost
$
QUESTION 18:
Ellix Company manufactures two models of ultra-high fidelity speakers, the X200 model and the X99 model. Data regarding the
two products follow:
Product
X200
X99
Direct labor hours
.3 DLHs per unit
.5 DLHs per unit
Annual
production
22,000 Units
38,000 Units
Total Direct
Labor Hours
6,600 DLHs
11,400 DLHs
25,600 DLHs
Additional information about the company follows:
a. Model X200 requires $33 in direct materials per unit, and model X99 requires $27.
b. The direct labor rate is $60 per hour.
c. The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products.
d. Model X200 is more complex to manufacture than model X99 and requires the use of a special equipment.
e. Because of the special work required in (d) above, the company is considering the use of activity based costing to apply
manufacturing overhead cost to products. Three activity cost pools have been identified as follows:
Estimated Total Activity
Activity Cost Pool
Machine setups
Special processing
General factory
Estimated
Total Cost
$154,100
403,300
510,000
$1,067,400
Activity Measure
Number of setups
Machine-hours
Direct labor-hours
X200
138
1,090
3,400
X99
92
0
13,600
Total
230
1,090
17,000
Requirement 1:
Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products.
(a) Compute the predetermined overhead rate. (Round your answer to the nearest dollar amount. Omit the "$" sign in your
response.)
Predetermined overhead rate
$
per DLH
(b) Compute the unit product cost of each model. (Round your answers to 2 decimal places. Omit the "$" sign in your
response.)
Model
X200
Unit product Cost
X99
$
$
Requirement 2:
Assume that the company decides to use activity-based costing to apply overhead cost to products.
(a) Compute the activity rate for each activity cost pool and determine the amount of overhead cost that would be applied to
each model. (Leave no cells blank - be certain to enter "0" wherever required. Round the Overhead cost per unit to 2
decimal places. Omit the "$" sign in your response.)
Activity cost Pool
Machine setups
Special processing
General factory
Activity Rate
$
$
$
Per setup
Per MH
Per DLH
Model X200:
Activity Cost Pool
Machine setups
Overhead Applied
$
Special processing
General factory
Total manufacturing overhead cost
$
Overhead cost per unit
$
Model X99
Activity Cost Pool
Machine setups
Overhead Applied
$
Special processing
General factory
Total manufacturing overhead cost
$
Overhead cost per unit
$
(b) Compute the unit product cost of each model. (Round your answers to 2 decimal places. Omit the "$" sign in your
response.)
Unit product cost of Model X200
Unit product cost of Model X99
$
$