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Lecture 20

Lecture 20.

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Lecture 20

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  1. Lecture 20

  2. Urban cosmetics have used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of 14.5 percent of direct labor cost. Monthly direct labor cost for sheen makeup is $27500. In an attempt to more equitably distribute quality control cost, management is considering activity based costing. The monthly data is shown in the following chart have been gathered for sheen makeup • Calculate the monthly quality control cost to be assigned to the Sheen product line under each of the costing method. • Traditional system which assign overhead based upon direct labor • Activity based costing • Does traditional product costing ove-rcost or under-cost the Sheen product line?

  3. Tioga Company Manufactures sophisticated lenses, mirrors and sun glasses. The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information. • The total budgeted material-handling cost is $52500 • under a costing system that allocates overhead on the basis of direct-labor hours, the material handling cost allocated to one lens, one mirror and one sun glass would be what amount? • Under activity based costing, the material handling cost allocated to one lens, one mirror and sun glass would be what amount? The cost drier for the material handling activity is the number of material moves.

  4. Tioga Company Manufactures sophisticated lenses and mirrors. The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information. • The total budgeted material-handling cost is $52500 • under a costing system that allocates overhead on the basis of direct-labor hours, the material handling cost allocated to one lens, one mirror and one sun glass would be what amount? • Under activity based costing, the material handling cost allocated to one lens, one mirror and sun glass would be what amount? The cost drier for the material handling activity is the number of material moves.

  5. The controller for Supply Company has established the following activity cost pools and cost drivers.

  6. An order for 1000 boxes of film development chemical has the following production requirements. • Requirements • Computer total FOH that should be assigned to the development chemical order • What is the overhead cost per box of chemical • Suppose supply company were to use a single predetermined FOH based on machine hours, compute the rate per hour • Under the approach in requirement (3) how much overhead would be assigned to the development chemical order? • In total. • Per box of chemicals • Explain why these two products costing systems result in such widely differing cost.

  7. The controller for Supply Company has established the following activity cost pools and cost drivers.

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