hhfma02.qc17.1_sh.tdxex
Which statement is false?
hhfma02.qc17.2_sh.tdxex
Two of
's production activities are kitting (assembling the raw materials needed for each computer in one kit)
and boxing the completed products for shipment to customers. Assume that
spends
million a month on
kitting and
million a month on boxing.
allocates the following:
- Kitting costs based on the number of parts used in the computer
- Boxing costs based on the cubic feet of space the computer requires
Suppose
estimates it will use
million parts a month and ship products with a total volume of
cubic feet. Assume that each desktop computer requires 100 parts and has a volume of 5 cubic feet.
What is the activity cost allocation rate? (Round all calculations to the nearest cent.)
million
hhfma02.qc17.3_sh.tdxex
Two of
's production activities are kitting (assembling the raw materials needed for each computer in one kit)
and boxing the completed products for shipment to customers. Assume that
spends
million a month on
kitting and
million a month on boxing.
allocates the following:
- Kitting costs based on the number of parts used in the computer
- Boxing costs based on the cubic feet of space the computer requires
Suppose
estimates it will use
million parts a month and ship products with a total volume of
million
cubic feet. Assume that each desktop computer requires
parts and has a volume of cubic feet. The allocation rate
for kitting is $
/part and the allocation rate for boxing is $
/cubic foot.
What are the kitting and boxing costs assigned to one desktop computer? (Round all calculations to the nearest cent.)
hhfma02.qc17.4_sh.tdxex
Two of
's production activities are kitting (assembling the raw materials needed for each computer in one kit)
and boxing the completed products for shipment to customers. Assume that
spends
million a month on
kitting and
million a month on boxing.
allocates the following:
- Kitting costs based on the number of parts used in the computer
- Boxing costs based on the cubic feet of space the computer requires
Suppose
estimates it will use
million parts a month and ship products with a total volume of
million
cubic feet. Assume that each desktop computer requires
parts and has a volume of cubic feet. The allocation rate
for kitting is $
/part and the allocation rate for boxing is $
/cubic foot. The kitting and boxing costs assigned to one
computer are
and $
, respectively.
contracts with its suppliers to pre-kit certain component parts before delivering them to
. Assume
this saves
million of the kitting cost and reduces the total number of parts by
million (because
considers each pre-kit as one part). If a desktop now uses
parts, what is the new kitting cost assigned to one desktop?
(Round all answers to the nearest cent.)
hhfma02.qc17.5_sh.tdxex
Keyboard can use ABC information for what decisions?
hhfma02.qc17.6_sh.tdxex
Which of the following is true for Dell, the computer company?
hhfma02.qc17.7_sh.tdxex
Companies enjoy many benefits from using JIT. Which is not a benefit of adopting JIT?
hhfma02.qc17.8_sh.tdxex
Which account is not used in JIT costing?
hhfma02.qc17.9_sh.tdxex
The cost of lost future sales after a customer finds a defect in a product is which type of quality cost?
hhfma02.qc17.10_sh.tdxex
Spending on testing a product before shipment to customers is which type of quality cost?
hhfma02.s17.1_s.tdxex
Activity-based costing requires four steps.
Requirement
1. Rank the following steps in the order they would be completed. Number the first step as "1" until you have ranked all four steps.
hhfma02.s17.2_sh.tdxex
and Roscoe are college friends planning a skiing trip to Aspen before the New Year. They estimated the following costs for
the trip:
(Click the icon to view the costs.)
Requirements
1.
suggests that the costs be shared equally. Calculate the amount each person would pay.
Roscoe
does not like the idea because he plans to stay in the room rather than ski. Roscoe suggests that each type of cost
2.
be allocated to each person based on the cost driver listed above. Using the activity allocation for each person, calculate
the amount that each person would pay based on his own consumption of the activity.
Requirement 1. If the costs are shared equally, each person would pay $
.
Requirement 2. If the costs were allocated, each person would pay the following:
$
Roscoe $
Data Table
hhfma02.s17.3_sh.tdxex
, Corp., is considering the use of activity-based costing. The following information is provided for the production of two
product lines:
(Click the icon to view the information.)
plans to produce
units of Product A and
units of Product B.
Requirement
1. Compute the ABC indirect manufacturing cost per unit for each product. (Round your answers to the nearest cent.)
The indirect manufacturing cost per unit for Product A is $
.
The indirect manufacturing cost per unit for Product B is $
.
Data Table
hhfma02.s17.4_sh.tdxex
The following information is provided for the
Hi-Gain antennas for use in remote areas.
Antenna, Corp., which manufactures two products: Lo-Gain antennas, and
(Click the icon to view the information.)
plans to produce
Lo-Gain antennas and
Hi-Gain antennas.
Requirements
1. Compute the ABC indirect manufacturing cost per unit for each product.
2. Compute the indirect manufacturing cost per unit using direct labor hours from the single-allocation-base system.
(Round the rates and unit costs to the nearest cent. Round total costs allocated to each product to the nearest whole dollar.)
Requirement 1. Compute the ABC indirect manufacturing cost per unit for each product.
The indirect manufacturing cost using ABC per unit for Lo-Gain antennas is $
.
The indirect manufacturing cost per unit using ABC for Hi-Gain antennas is $
.
Requirement 2. Compute the indirect manufacturing cost per unit using direct labor hours from the single-allocation-base system.
(Calculate the indirect manufacturing cost per unit only after determining the total indirect manufacturing costs allocated to each
product.)
The indirect manufacturing cost per unit for Lo-Gain antennas is $
.
The indirect manufacturing cost per unit for Hi-Gain antennas is $
.
Page 1 of 2
hhfma02.s17.4_sh.tdxex
Data Table
Page 2 of 2
hhfma02.s17.5_sh.tdxex
, Corp., makes two products: C and D. The following data have been summarized:
(Click the icon to view the data.)
The company plans to manufacture
units of each product.
Requirement
1. Calculate the product cost per unit for Products C and D using activity-based costing. (Round your answers to the nearest cent.)
Requirement 1. Calculate the product cost per unit for Products C and D using activity-based costing. (Round your answers to the
nearest cent.)
The per unit product cost for Product C is $
.
The per unit product cost for Product D is $
.
Data Table
Indirect manufacturing cost information includes the following:
hhfma02.s17.6_sh.tdxex
, Corp., manufactures mid-fi and hi-fi stereo receivers. The following data have been summarized:
(Click the icon to view the data.)
The company plans to manufacture
units of the mid-fi receivers and
units of the hi-fi receivers.
Requirement
1. Calculate the product cost per unit for both products using activity-based costing. (Round your answers to the nearest cent.)
Requirement 1. The per unit product cost for Mid-Fi receivers is $
The per unit product cost for Hi-Fi receivers is $
Data Table
Indirect manufacturing cost information includes:
.
.
hhfma02.s17.7_sh.tdxex
, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications. The
president of the company expects to incur
of indirect costs this year, and she expects her firm to work
direct labor
hours.
systems consultants earn
per hour. Clients are billed at
of direct labor cost. Last month
consultants spent
hours on
engagement.
Requirements
indirect cost allocation rate per direct labor hour.
1. Compute
Compute
the
total
cost assigned to the
engagement.
2.
engagement.
3. Compute the operating income from the
Requirement 1. Compute
indirect cost allocation rate per direct labor hour. (Round your answer to the nearest cent.)
Requirement 2. Compute the total cost assigned to the
Requirement 3. Compute the operating income from the
engagement. (Round your answer to the nearest whole dollar.)
engagement.
hhfma02.s17.8_sh.tdxex
, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications. The
president of the company expects to incur
of indirect costs this year, and she expects her firm to work
direct labor
hours.
systems consultants earn
per hour. Clients are billed at
of direct labor cost. The president of
suspects that her allocation of indirect costs could be giving misleading results, so she decides to develop an ABC system. She
identifies three activities: documentation preparation, information technology support, and training. The president figures that
documentation costs are driven by the number of pages, information technology support costs are driven by the number of software
applications used, and training costs are most closely associated with the number of direct labor hours worked. Estimates of the
costs and quantities of the allocation bases follow:
(Click the icon to view the cost and quantity data.)
Requirement
1. Compute the cost allocation rate for each activity.
Requirement 1. Compute the cost allocation rate for document preparation.
Compute the cost allocation rate for information technology support.
Compute the cost allocation rate for training.
Page 1 of 2
hhfma02.s17.8_sh.tdxex
Data Table
Page 2 of 2
hhfma02.s17.9_sh.tdxex
, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications.
Clients are billed at
of direct labor cost. The president of
, Inc., suspects that her allocation of indirect costs could be
giving misleading results, so she decides to develop an ABC system. She identifies three activities: documentation preparation,
information technology support, and training. The president figures that documentation costs are driven by the number of pages,
information technology support costs are driven by the number of software applications used, and training costs are most closely
associated with the number of direct labor hours worked. Suppose
direct labor rate was
per hour, the documentation
cost was $ per page, the information technology support cost was $
per application, and training costs were $
per direct
labor hour. The
engagement used the following resources last month:
(Click the icon to view the cost and quantity data.)
Requirements
Compute the cost assigned to the
1.
Compute the operating income from the
2.
engagement, using the ABC system.
engagement, using the ABC system.
Requirement 1. Compute the cost assigned to the
nearest whole dollar.)
Requirement 2. Compute the operating income from the
engagement, using the ABC system. (Round your answer to the
engagement, using the ABC system.
Page 1 of 2
hhfma02.s17.9_sh.tdxex
Data Table
Page 2 of 2
hhfma02.s17.10_sh.tdxex
, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications. The
costs associated with the
engagement follow:
(Click the icon to view the costs.)
desires a % target profit after covering all costs.
Requirement
engagement, what would
1. Considering the total costs assigned to the
achieve that profit? (Round your answer to the nearest whole dollar.)
Rquirement 1.
Data Table
would have to charge $
to achieve the desired profit.
have to charge the customer to
hhfma02.s17.11_s.tdxex
Consider the following characteristics of either a JIT production system or a traditional production system.
Requirement
1. Indicate whether each is characteristic of a JIT production system or a traditional production system.
hhfma02.s17.12_sh.tdxex
Products uses a JIT system to manufacture trading pins for the Hard Rock Cafe. The standard cost per pin is
materials and
for conversion costs. Last month
recorded the following data:
Requirement
1. Use JIT costing to prepare journal entries for the month, including the entry to close the Conversion costs account.
Requirement 1. Journalize the purchase of raw materials.
Journalize the actual conversion costs incurred.
Prepare the entry to record the completed production.
Page 1 of 2
for raw
hhfma02.s17.12_sh.tdxex
Prepare the entry to record the cost of the units sold.
Journalize the entry to close the Conversion costs account.
Page 2 of 2
hhfma02.s17.13_s.tdxex
Harry, Inc., manufactures motor scooters. Consider each of the following examples of quality costs.
Requirement
1. Indicate which of the following quality cost categories each example represents.

P
Prevention costs

A
Appraisal costs

IF
Internal failure costs

EF External failure costs
hhfma02.e17.14_sh.tdxex
, Inc., uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have
identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity
costs for 2010 and their allocation bases are as follows:
(Click the icon to view the budgeted costs and activity bases.)
expects to produce
chrome bumpers during the year. The bumpers are expected to use
setups, and consume
hours of finishing time.
parts, require
Requirements
1. Compute the cost allocation rate for each activity.
2. Compute the indirect manufacturing cost of each bumper.
Requirement 1. Compute the cost allocation rate for materials handling.
Compute the cost allocation rate for machine setup.
Compute the cost allocation rate for the insertion of parts.
Compute the cost allocation rate for finishing.
Requirement 2. Compute the indirect manufacturing cost of each bumper. (Round each answer to the nearest cent.)
Page 1 of 2
hhfma02.e17.14_sh.tdxex
Data Table
Page 2 of 2
hhfma02.e17.15_sh.tdxex
Champs Corp. uses activity-based costing to account for its motorcycle manufacturing process. Company managers have
identified three supporting manufacturing activities: inspection, machine setup, and machine maintenance. The budgeted activity
costs for 2011 and their allocation bases are as follows:
(Click the icon to view the budgeted costs and activity bases.)
Champs expects to produce
custom-built motorcycle for the year. The motorcycles are expected to require
setups, and
maintenance hours.
Requirements
1. Compute the cost allocation rate for each activity.
2. Compute the indirect manufacturing cost of each motorcycle.
Requirement 1. Compute the cost allocation rate for inspection.
Compute the cost allocation rate for machine setup.
Compute the cost allocation rate for machine maintenance.
Requirement 2. Compute the indirect manufacturing cost of each motorcycle.
Page 1 of 2
inspections,
hhfma02.e17.15_sh.tdxex
Data Table
Page 2 of 2
hhfma02.e17.16_sh.tdxex
Company manufactures wheel rims. The controller
budgeted the following ABC allocation rates for 2010:
(Click the icon to view the allocation rates.)
The number of parts is now a feasible allocation base because
recently purchased bar coding technology.
produces two wheel rim models: standard and deluxe.
Budgeted data for 2010 are as follows:
(Click the icon to view the budgeted data.)
The company's managers expect to produce
each model during the year.
units of
Requirements
1. Compute the total budgeted indirect manufacturing cost
for 2010.
2. Compute the ABC indirect manufacturing cost per unit of
each model. Carry each cost to the nearest cent.
used a direct labor hour
3. Prior to 2010,
single-allocation-base system. Compute the (single)
allocation rate based on direct labor hours for 2010. Use
this rate to determine the indirect manufacturing cost per
wheel rim for each model, to the nearest cent.
Requirement 1. Compute the total budgeted indirect manufacturing cost for 2010.
Requirement 2. Compute the ABC indirect manufacturing cost per unit of each model. (Carry the setup cost per rim to three
decimal places. Round final answers to the nearest cent.)
Page 1 of 3
hhfma02.e17.16_sh.tdxex
Requirement 3. Compute the (single) allocation rate based on direct labor hours for 2010. (Round your answer to the nearest cent.)
Use the (single) allocation rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent.
Page 2 of 3
hhfma02.e17.16_sh.tdxex
Data Table
Data Table
Page 3 of 3
hhfma02.e17.17_sh.tdxex
Dog Collars uses activity-based costing.
's system has the following features:
(Click the icon to view the features.)
Requirements
will incur to purchase the needed materials and then assemble and package
dog
1. Compute the total cost
collars. Also compute the cost per collar. (Round the total cost to the nearest dollar and the cost per collar to the nearest cent.)
adds a % markup to total cost. What total price will the company bid for the entire PetStart order?
2. For bidding,
(Round to the nearest dollar.)
has a traditional product costing system that allocates all costs other than
3. Suppose that instead of an ABC system,
direct materials at the rate of
per direct labor hour. The dog collar order will require
direct labor hours. What
total price will
bid using this system's total cost? (Round to the nearest dollar.)
4. Use your answers to requirements 2 and 3 to explain how ABC can help
will offer PetStart.
make a better decision about the bid price it
Requirement 1.
The total cost
will incur to purchase the materials and assemble and package
The cost per collar is $
dog collars is $
.
.
Requirement 2.
The total price the company will bid for the PetStart order is $
Requirement 3.
The total price that
$
.
will bid if using a traditional product costing system that allocates all costs on the direct labor hours is
Requirement 4.
's bid would be $
using the direct labor single-allocation-base system than using ABC. If the company uses
the direct labor single-allocation-base system they
system they
their chances of winning the bid. If the company uses the ABC
their chance of winning the bid.
Page 1 of 2
hhfma02.e17.17_sh.tdxex
Data Table
Each collar has parts; direct materials cost per collar is $
purchase orders if PetStart accepts
's bid.
. Suppose PetStart has asked for a bid on
Page 2 of 2
dog collars.
will issue a total of
hhfma02.e17.18_sh.tdxex
Company manufactures wheel rims. The company produces two wheel rim models: standard and deluxe. For 2011,
managers have decided to use the same indirect manufacturing costs per wheel rim that they computed in 2010. In
addition to the unit indirect manufacturing costs, the following data are budgeted for the company's standard and deluxe models for
2011:
(Click the icon to view the budgeted information.)
Because of limited machine-hour capacity,
can produce either 2,000 standard rims or 2,000 deluxe rims.
Requirements
managers rely on the ABC unit cost data computed in 2010, which model will they produce? Carry each
1. If
cost to the nearest cent. (All nonmanufacturing costs are the same for both models.)
2. If the managers rely on the single-allocation-base cost data, which model will they produce?
?
3. Which course of action will yield more income for
Requirement 1.
Use the ABC unit cost data to compute the gross profit for each model.
managers will produce 2000 units of the
model to maximize income.
Requirement 2.
Use the single allocation unit cost data to compute the gross profit for each model.
Page 1 of 3
hhfma02.e17.18_sh.tdxex
If they rely on the single-allocation-base data,
income.
managers will produce the
model. It will appear to maximize
Requirement 3.
will earn more income by producing the
model.
data.
Page 2 of 3
data are generally more accurate than
hhfma02.e17.18_sh.tdxex
Data Table
Page 3 of 3
hhfma02.e17.19_sh.tdxex
Company manufactures wheel rims. The controller budgeted ABC allocation rates for 2010.
rim models: standard and deluxe. Budgeted data for 2010 are as follows:
produces two wheel
(Click the icon to view the 2010 allocation rates and budgeted data.)
In 2011,
managers used the same indirect manufacturing costs per wheel rim that they computed in 2010. In addition to
the unit indirect manufacturing costs, the following data are budgeted for the company's standard and deluxe models for 2011.
(Click the icon to view the budgeted information and the deluxe unit cost calculation.)
Controller
is surprised by the increase in cost of the deluxe model under ABC. He had a market research study
conducted.
(Click the icon to view the results of the market research.)
Requirement
1. Would implementing the value engineering recommendation enable
to achieve its target cost for the deluxe rim?
Requirement 1. First calculate the revised finishing activity cost per rim.
(Round the calculation of the total cost to the nearest cent.)
the value engineering process will bring the cost of the deluxe model to $
Page 1 of 3
which is
the target cost of
.
hhfma02.e17.19_sh.tdxex
Data Table
Data Table
Page 2 of 3
hhfma02.e17.19_sh.tdxex
More Info
Market research shows that for the deluxe rim to provide a reasonable profit,
will have to meet a target manufacturing cost of
per rim. A value
engineering study by
employees suggests that modifications to the finishing process could cut finishing cost from
to
per hour and reduce
the finishing direct labor hours per deluxe rim from
hours to
hours. Direct materials would remain unchanged at
per rim, as would direct labor at
per rim. The materials handling, machine setup, and insertion of parts activity costs also would remain the same.
Page 3 of 3
hhfma02.e17.20_sh.tdxex
, Inc., produces universal remote controls.
uses a JIT costing system. One of the company's products has a standard
direct materials cost of
per unit and a standard conversion cost of
per unit. During January 2011,
produced
units
and sold
. It purchased
of direct materials and incurred actual conversion costs totaling
.
Requirements
1. Prepare summary journal entries for January.
. Use a T-account to find the January 31
2. The January 1, 2011, balance of the Raw and in-process inventory account was
balance.
3. Use a T-account to determine whether conversion costs are over- or underallocated for the month. By how much? Give the
journal entry to close the Conversion costs account.
Requirement 1. Prepare the summary journal entries for January.
Journalize the purchase of raw materials.
Journalize the actual conversion costs incurred.
Page 1 of 3
hhfma02.e17.20_sh.tdxex
Journalize the completed production.
Journalize the cost of sales.
Requirement 2. Complete the T-account to find the ending balance of Raw and in-process inventory. (Make sure to use the next
available cell on the proper side of the T-account when posting the entries.)
Page 2 of 3
hhfma02.e17.20_sh.tdxex
Requirement 3. Use a T-account to determine whether conversion costs are over- or underallocated for the month.
Conversion costs are
by $
.
Give the journal entry to close the Conversion costs account.
Page 3 of 3
hhfma02.e17.21_sh.tdxex
produces electronic calculators. Suppose
costs. The following data apply to July production:
's standard cost per calculator is
for materials and
for conversion
(Click the icon to view the data.)
uses JIT costing.
Requirements
1. Prepare summary journal entries for July, including the entry to close the Conversion costs account.
. Use a T-account to find the ending balance of Finished
2. The beginning balance of Finished goods inventory was $
goods inventory.
Requirement 1. Prepare summary journal entries for July, including the entry to close the Conversion costs account.
Journalize the purchase of raw materials.
Journalize the actual conversion costs incurred.
Page 1 of 3
hhfma02.e17.21_sh.tdxex
Journalize the completed production.
Journalize the cost of sales.
Journalize the entry to close the Conversion costs account.
Page 2 of 3
hhfma02.e17.21_sh.tdxex
Requirement 2. Complete the T-account to find the ending balance of Finished goods inventory. (Make sure to use the next
available cell on the proper side of the T-account when posting the entries.)
Data Table
Page 3 of 3
hhfma02.e17.22_s.tdxex
Millan & Co. makes electronic components. Mike Millan, the president, recently instructed vice president Steve Bensen to develop a
total quality control program. "If we don't at least match the quality improvements our competitors are making," he told Bensen,
"we'll soon be out of business." Bensen began by listing various "costs of quality" that Millan incurs. The first six items that came to
mind were:
(Click the icon to view the information.)
Requirement
1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.
Data Table
a. Costs incurred by Millan customer representatives traveling to customer sites to repair
defective products
b. Lost profits from lost sales due to reputation for less-than-perfect products
c. Costs of inspecting components in one of Millan's production processes
d. Salaries of engineers who are designing components to withstand electrical overloads
e. Costs of reworking defective components after discovery by company inspectors
f. Costs of electronic components returned by customers
hhfma02.e17.23_sh.tdxex
, Inc., manufactures door panels. Suppose
management (TQM) program:
is considering spending the following amounts on a new total quality
(Click the icon to view the information.)
expects the new program would save costs through the following:
(Click the icon to view the information.)
Requirements
1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.
2. Should
implement the new quality program? Give your reason.
Requirement 1. Classify each cost into one of the four categories of quality costs.
Requirement 2. Should
implement the new quality program?
implement the quality program. The cost of implementing the program is $
failing to implement the program.
Page 1 of 2
the costs of
hhfma02.e17.23_sh.tdxex
Data Table
Data Table
Page 2 of 2
hhfma02.e17.24_sh.tdxex
manufactures high-quality speakers. Suppose
is considering a new quality program:
(Click the icon to view the information.)
Requirements
1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, external failure).
2. Should
implement the quality program? Give your reasons.
Requirement 1. Classify each cost into one of the four categories of quality costs.
Requirement 2. Should
implement the quality program?
implement the quality program. The cost of implementing the program is $
failing to implement the program.
Page 1 of 2
the costs of
hhfma02.e17.24_sh.tdxex
Data Table
is considering spending the following amounts on the new program:
expects this quality program to save costs, as follows:
It also expects this program to avoid lost profits from the following:
Page 2 of 2
hhfma02.p17.25a_sh.tdxex
The
Manufacturing Company in Hondo, Texas, assembles and tests electronic components used in handheld video phones.
Consider the following data regarding component T24:
The activities required to build the component follow:
(Click the icon to view the activity data.)
(Click the icon to view the requirements.)
Requirement 1. Fill in the blanks in the list of activities.
Fill in the blanks in the opening schedule.
Page 1 of 3
hhfma02.p17.25a_sh.tdxex
Requirement 2. How is labor cost assigned to products under this ABC product costing system?
Direct labor is
tracking of labor.
. This reduces accounting costs because there is
elaborate
Requirement 3.
Managers favor this multiple-rate, activity-based costing system because it better pinpoints
control and it provides more accurate data for
.
Page 2 of 3
for planning and
hhfma02.p17.25a_sh.tdxex
Data Table
More Info
Requirements
1. Fill in the blanks in both the opening schedule and the list of activities.
2. How is labor cost assigned to products under this ABC product costing
system?
older
3. Why might managers favor this ABC system instead of
system, which allocated all conversion costs on the basis of direct
labor?
Page 3 of 3
hhfma02.p17.26a_sh.tdxex
, Inc., manufactures bookcases and uses an activity-based costing system.
activity areas and related data follow:
(Click the icon to view the activity areas and related data.)
Requirements
1. Compute the manufacturing product cost per unit of each type of bookcase.
each and
2. Suppose that premanufacturing activities, such as product design, were assigned to the standard bookcases at
to the unfinished bookcases at
each. Similar analyses were conducted of postmanufacturing activities such as
distribution, marketing, and customer service. The postmanufacturing costs were
per standard bookcase and
per
unfinished bookcase. Compute the full product costs per unit.
3. Which product costs are reported in the external financial statements? Which costs are used for management decision
making? Explain the difference.
managers set for unfinished bookcases to earn a unit profit of
?
4. What price should
Requirement 1. Compute the manufacturing product cost per unit of each type of bookcase: Standard and Unfinished. (Complete
all input boxes. Round answers to the nearest whole dollar.)
Requirement 2. Compute the full product costs per unit.
Page 1 of 3
hhfma02.p17.26a_sh.tdxex
Requirement 3. Which product costs are reported in the external financial statements? Which costs are used for management
decision making?
are reported in the financial statements. Managers use
for decisions
such as pricing and product emphasis. Full product costs includes the
that are expensed as incurred for external reporting. However, these costs often are
.
Requirement 4. What price should
managers set for unfinished bookcases to earn a unit profit of
Page 2 of 3
?
hhfma02.p17.26a_sh.tdxex
Data Table
produced two styles of bookcases in April: the standard bookcase and an unfinished bookcase, which has fewer parts and requires no finishing. The
totals for quantities, direct materials costs, and other data follow:
Page 3 of 3
hhfma02.p17.27a_sh.tdxex
Pharmaceuticals manufacturers an over-the-counter allergy medication. The company sells both large commercial
containers of 1,000 capsules to health-care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels.
The following information has been developed to determine if an activity-based costing system would be beneficial:
(Click the icon to view the information.)
(Click the icon to view the requirements.)
Requirement 1. Compute the cost allocation rate for each activity.
The cost allocation rate for materials handling is $
The cost allocation rate for packaging is $
.
.
The cost allocation rate for quality assurance is $
.
Requirement 2. Use the activity-based cost allocation rates to compute the activity costs per unit of commercial containers and
travel packs. (Round the cost per unit to the nearest cent.)
The activity costs per unit for commercial containers is $
The activity costs per unit for travel packs is $
.
.
Requirement 3. Compute the total indirect costs allocated to commercial containers and travel packs under the original
single-allocation-base system.
The total indirect costs allocated to commercial containers under the original system is $
The total indirect costs allocated to travel packs under the original system is $
.
.
Now compute the indirect cost per unit for each product under the orginal single-allocation-base system. (Round the cost per unit to
the nearest cent.)
The indirect cost per unit for commercial containers under the original system is $
The indirect cost per unit for travel packs under the original system is $
Page 1 of 4
.
hhfma02.p17.27a_sh.tdxex
Requirement 4. Compare the activity-based costs per unit to the costs from the single-allocation-base system. How have the unit
costs changed?
The original system
the commercial containers and
ABC recognizes that commercial containers
packs and allocated
the travel packs.
3 times as much material handling and quality assurance as travel
of those costs to commercial containers.
Page 2 of 4
hhfma02.p17.27a_sh.tdxex
Data Table
Other production information includes the following:
More Info
Requirements
1. Compute the cost allocation rate for each activity.
2. Use the activity-based cost allocation rates to compute the activity costs per unit of
commercial containers and travel packs. (Hint: First compute the total activity costs
allocated to each product line, and then compute the cost per unit.)
's original single-allocation-base costing system allocated indirect costs to
3.
products at
per machine hour. Compute the total indirect costs allocated to the
commercial containers and to the travel packs under the original system. Then
compute the indirect cost per unit for each product.
Page 3 of 4
hhfma02.p17.27a_sh.tdxex
4. Compare the activity-based costs per unit to the costs from the single-allocation-base
system. How have the unit costs changed? Explain why the costs changed as they
did.
Page 4 of 4
hhfma02.p17.28a_sh.tdxex
produces fleece jackets. The company uses JIT costing for its JIT production system.
has two inventory
accounts: Raw and in-process inventory and Finished goods inventory. On February 1, 2010, the account balances were Raw and
in-process inventory,
; Finished goods inventory,
. The standard cost of a jacket is $ :
direct materials plus
conversion costs. Data for February's activities follow:
(Click the icon to view the data.)
Requirements
?
1. What are the major features of a JIT production system such as that of
2. Prepare summary journal entries for February. Under- and overallocated conversion costs are closed to Cost of goods sold
monthly.
3. Use a T-account to determine the February 28, 2010, balance of Raw and in-process inventory.
Requirement 1. What are the major features of a JIT system?
Requirement 2. Prepare summary journal entries for February. Under- and overallocated conversion costs are closed to Cost of
goods sold monthly.
Journalize the purchase of raw materials.
Page 1 of 3
hhfma02.p17.28a_sh.tdxex
Journalize the actual conversion costs incurred.
Journalize the completed production.
Journalize the cost of sales.
Page 2 of 3
hhfma02.p17.28a_sh.tdxex
Journalize the entry to close the Conversion costs account.
Requirement 3. Use a T-account to determine the February 28, 2010, balance of Raw and in-process inventory. (Make sure to use
the next available cell on the proper side of the T-account when posting the entries.)
Data Table
Page 3 of 3
hhfma02.p17.29a_sh.tdxex
, Inc., is using a costs-of-quality approach to evaluate design engineering efforts for a new skateboard.
's senior managers
expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities
over the 2-year life of the skateboards follow. Also shown are the cost allocation rates for each activity.
(Click the icon to view the information.)
Requirements
1. Calculate the predicted quality cost savings from the design engineering work.
spent
on design engineering for the new skateboard. What is the net benefit of this "preventive" quality activity?
2.
's managers have in implementing this costs-of-quality approach? What alternative approach
3. What major difficulty would
could they use to measure quality improvement?
Requirement 1. Calculate the predicted quality cost savings from the design engineering work.
The predictive quality cost savings from the design engineering work is $
Requirement 2.
quality activity?
spent
.
on design engineering for the new skateboard. What is the net benefit of this "preventive"
The net benefit of the "preventive" quality activity is $
Requirement 3. What major difficulty would
.
's managers have in implementing this costs-of-quality approach?
What alternative approach could they use to measure quality improvement?
Page 1 of 2
hhfma02.p17.29a_sh.tdxex
Data Table
Page 2 of 2
hhfma02.p17.30b_sh.tdxex
The
Manufacturing Company in Hondo, Texas, assembles and tests electronic components used in handheld video phones.
Consider the following data regarding component T24:
The activities required to build the component follow:
(Click the icon to view the activity data.)
(Click the icon to view the requirements.)
Requirement 1. Fill in the blanks in the list of activities.
Fill in the blanks in the opening schedule.
Page 1 of 3
hhfma02.p17.30b_sh.tdxex
Requirement 2. How is labor cost assigned to products under this ABC product costing system?
Direct labor is
tracking of labor.
. This reduces accounting costs because there is
elaborate
Requirement 3.
Managers favor this multiple-rate, activity-based costing system because it better pinpoints
control and it provides more accurate data for
.
Page 2 of 3
for planning and
hhfma02.p17.30b_sh.tdxex
Data Table
More Info
Requirements
1. Fill in the blanks in both the opening schedule and the list of activities.
2. How is labor cost assigned to products under this ABC product costing
system?
older
3. Why might managers favor this ABC system instead of
system, which allocated all conversion costs on the basis of direct
labor?
Page 3 of 3
hhfma02.p17.31b_sh.tdxex
, Inc., manufactures bookcases and uses an activity-based costing system.
activity areas and related data
follow:
(Click the icon to view the activity areas and related data.)
Requirements
1. Compute the manufacturing product cost per unit of each type of bookcase.
each and
2. Suppose that premanufacturing activities, such as product design, were assigned to the standard bookcases at
to the unfinished bookcases at
each. Similar analyses were conducted of postmanufacturing activities such as
distribution, marketing, and customer service. The postmanufacturing costs were
per standard bookcase and
per
unfinished bookcase. Compute the full product costs per unit.
3. Which product costs are reported in the external financial statements? Which costs are used for management decision
making? Explain the difference.
managers set for unfinished bookcases to earn a unit profit of
?
4. What price should
Requirement 1. Compute the manufacturing product cost per unit of each type of bookcase: Standard and Unfinished. (Complete
all input boxes. Round answers to the nearest whole dollar.)
Requirement 2. Compute the full product costs per unit.
Page 1 of 3
hhfma02.p17.31b_sh.tdxex
Requirement 3. Which product costs are reported in the external financial statements? Which costs are used for management
decision making?
are reported in the financial statements. Managers use
for decisions
such as pricing and product emphasis. Full product costs includes the
that are expensed as incurred for external reporting. However, these costs often are
.
Requirement 4. What price should
managers set for unfinished bookcases to earn a unit profit of
Page 2 of 3
?
hhfma02.p17.31b_sh.tdxex
Data Table
produced two styles of bookcases in May: the standard bookcase and an unfinished bookcase, which has fewer parts and requires no finishing.
The totals for quantities, direct materials costs, and other data follow:
Page 3 of 3
hhfma02.p17.32b_sh.tdxex
Pharmaceuticals manufacturers an over-the-counter allergy medication. The company sells both large commercial
containers of 1,000 capsules to health-care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels.
The following information has been developed to determine if an activity-based costing system would be beneficial:
(Click the icon to view the information.)
(Click the icon to view the requirements.)
Requirement 1. Compute the cost allocation rate for each activity.
The cost allocation rate for materials handling is $
The cost allocation rate for packaging is $
.
.
The cost allocation rate for quality assurance is $
.
Requirement 2. Use the activity-based cost allocation rates to compute the activity costs per unit of commercial containers and
travel packs. (Round the cost per unit to the nearest cent.)
The activity costs per unit for commercial containers is $
The activity costs per unit for travel packs is $
.
.
Requirement 3. Compute the total indirect costs allocated to commercial containers and travel packs under the original
single-allocation-base system.
The total indirect costs allocated to commercial containers under the original system is $
The total indirect costs allocated to travel packs under the original system is $
.
.
Now compute the indirect cost per unit for each product under the orginal single-allocation-base system. (Round the cost per unit to
the nearest cent.)
The indirect cost per unit for commercial containers under the original system is $
The indirect cost per unit for travel packs under the original system is $
Page 1 of 4
.
hhfma02.p17.32b_sh.tdxex
Requirement 4. Compare the activity-based costs per unit to the costs from the single-allocation-base system. How have the unit
costs changed?
The original system
the commercial containers and
ABC recognizes that commercial containers
packs and allocated
the travel packs.
3 times as much material handling and quality assurance as travel
of those costs to commercial containers.
Page 2 of 4
hhfma02.p17.32b_sh.tdxex
Data Table
Other production information includes the following:
More Info
Requirements
1. Compute the cost allocation rate for each activity.
2. Use the activity-based cost allocation rates to compute the activity costs per unit of
commercial containers and travel packs. (Hint: First compute the total activity costs
allocated to each product line, and then compute the cost per unit.)
's original single-allocation-base costing system allocated indirect costs to
3.
products at
per machine hour. Compute the total indirect costs allocated to the
commercial containers and to the travel packs under the original system. Then
compute the indirect cost per unit for each product.
Page 3 of 4
hhfma02.p17.32b_sh.tdxex
4. Compare the activity-based costs per unit to the costs from the single-allocation-base
system. How have the unit costs changed? Explain why the costs changed as they
did.
Page 4 of 4
hhfma02.p17.33b_sh.tdxex
produces fleece jackets. The company uses JIT costing for its JIT production system.
has two inventory
accounts: Raw and in-process inventory and Finished goods inventory. On March 1, 2010, the account balances were Raw and
in-process inventory,
; Finished goods inventory,
. The standard cost of a jacket is $ :
direct materials plus
conversion costs. Data for March's activities follow:
(Click the icon to view the data.)
Requirements
?
1. What are the major features of a JIT production system such as that of
2. Prepare summary journal entries for March. Under- and overallocated conversion costs are closed to Cost of goods sold
monthly.
3. Use a T-account to determine the March 31, 2010, balance of Raw and in-process inventory.
Requirement 1. What are the major features of a JIT system?
Requirement 2. Prepare summary journal entries for March. Under- and overallocated conversion costs are closed to Cost of
goods sold monthly.
Journalize the purchase of raw materials.
Page 1 of 3
hhfma02.p17.33b_sh.tdxex
Journalize the actual conversion costs incurred.
Journalize the completed production.
Journalize the cost of sales.
Page 2 of 3
hhfma02.p17.33b_sh.tdxex
Journalize the entry to close the Conversion costs account.
Requirement 3. Use a T-account to determine the March 31, 2010, balance of Raw and in-process inventory. (Make sure to use
the next available cell on the proper side of the T-account when posting the entries.)
Data Table
Page 3 of 3
hhfma02.p17.34b_sh.tdxex
, Inc., is using a costs-of-quality approach to evaluate design engineering efforts for a new wakeboard.
's senior
managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions
in activities over the 2-year life of the wakeboards follow. Also shown are the cost allocation rates for each activity.
(Click the icon to view the information.)
Requirements
1. Calculate the predicted quality cost savings from the design engineering work.
spent
on design engineering for the new wakeboard. What is the net benefit of this "preventive" quality
2.
activity?
's managers have in implementing this costs-of-quality approach? What alternative
3. What major difficulty would
approach could they use to measure quality improvement?
Requirement 1. Calculate the predicted quality cost savings from the design engineering work.
The predictive quality cost savings from the design engineering work is $
Requirement 2.
quality activity?
spent
.
on design engineering for the new wakeboard. What is the net benefit of this "preventive"
The net benefit of the "preventive" quality activity is $
Requirement 3. What major difficulty would
.
's managers have in implementing this costs-of-quality approach?
What alternative approach could they use to measure quality improvement?
Page 1 of 2
hhfma02.p17.34b_sh.tdxex
Data Table
Page 2 of 2
hhfma02.e17.35_sh.tdxex
completed a special landscaping job for
data about the job, including ABC information, would be as follows:
. If
had used activity-based costing,
's
(Click the icon to view the data.)
Requirements
uses one setup for the
1.
paid for the job is
2. If the price
job and installs
plants. What is the total cost of the
, what is the profit or loss on the job under ABC?
Requirement 1. Calculate the total cost of the
Requirement 2. Calculate
parentheses.)
job?
job under ABC.
's profit or loss on the job under ABC if
Page 1 of 2
paid
. (Enter a loss with a minus sign or
hhfma02.e17.35_sh.tdxex
Data Table
Page 2 of 2