Managerial Accounting Notes
Accounting chapter 7 managerial accounting
Exercises
Lambert Fabrication, Inc., uses activity-based costing data for internal decisions. The company has the following four activity cost pools:
Activity Cost Pool Annual Activity
Producing units 5,000 machine-hours
Processing orders 1,000 orders
Customer support 200 customers
Other Not applicable
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The company traces the costs of direct materials and direct labor to jobs (i.e., orders). Overhead costs—both manufacturing and non-manufacturing—are allocated to jobs using the activity-based costing system. These overhead costs are listed below:
Indirect factory wages $100,000
Other manufacturing overhead S200,000
Selling and administrative expense $400,000
To develop the company's activity-based costing system, employees were asked how they distributed their time and resources across the four activity cost pools. The results of those interviews appear below:
Results of Interviews of Employees
Distribution of Resource Consumption Across Activities Producing Processing Customer
Units Orders Support Other Totals
Indirect factory wages 40% 30% 10% 20% 100%
Other manufacturing overhead 30% 10% 0% 60% 100%
Selling and administrative expense 0% 25% 40% 35% 100%
a. Using the results of the interviews, carry out the first-stage allocation of costs to the activity cost pools.
Producing Processing Customer
Units Orders Support Other Totals
Indirect factory wages $ S S $ S
Other manufacturing overhead
Selling and administrative expense..
Total overhead cost $ $ $___ ___ $ $__ ____ Chapter 7
b. Using the results of the first-stage allocation, compute the activity rates for each of the activity cost pools.
(Activity rates are not computed
Exercises
Lambert Fabrication, Inc., uses activity-based costing data for internal decisions. The company has the following four activity cost pools:
Activity Cost Pool Annual Activity
Producing units 5,000 machine-hours
Processing orders 1,000 orders
Customer support 200 customers
Other Not applicable
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The company traces the costs of direct materials and direct labor to jobs (i.e., orders). Overhead costs—both manufacturing and non-manufacturing—are allocated to jobs using the activity-based costing system. These overhead costs are listed below:
Indirect factory wages $100,000
Other manufacturing overhead S200,000
Selling and administrative expense $400,000
To develop the company's activity-based costing system, employees were asked how they distributed their time and resources across the four activity cost pools. The results of those interviews appear below:
Results of Interviews of Employees
Distribution of Resource Consumption Across Activities Producing Processing Customer
Units Orders Support Other Totals
Indirect factory wages 40% 30% 10% 20% 100%
Other manufacturing overhead 30% 10% 0% 60% 100%
Selling and administrative expense 0% 25% 40% 35% 100%
a. Using the results of the interviews, carry out the first-stage allocation of costs to the activity cost pools.
Producing Processing Customer
Units Orders Support Other Totals
Indirect factory wages $ S S $ S
Other manufacturing overhead
Selling and administrative expense..
Total overhead cost $ $ $___ ___ $ $__ ____ Chapter 7
b. Using the results of the first-stage allocation, compute the activity rates for each of the activity cost pools.
(Activity rates are not computed