CHAPTER 3 Predetermined Overhead Rates‚ Flexible Budgets‚ and Absorption/Variable Costing Questions 1. Although both variable and mixed costs change in total with activity measure changes‚ the difference is that variable costs change in direct proportion to such activity changes and mixed costs do not. Since a mixed cost has both a fixed and variable component‚ the cost per unit at different activity levels is not constant as it is with a variable cost. 2. No‚ these are not always the best points
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Ethics; Predetermined Overhead Rate and Capacity Pat Miranda‚ the new controller of Vault Hard Drives‚ Inc.‚ has just returned from a seminar on the choice of the activity level in the predetermined overhead rate. Even though the subject did not sound exciting at first‚ she found that there were some important ideas presented that should get a hearing at her company. After returning from the seminar‚ she arranged a meeting with the production manager‚ J. Stevens‚ and the assistant production manager
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CASE 3A – AUERBACH ENTERPRISES Auerbach Enterprises manufactures air conditioners for automobiles and trucks manufactured throughout North America. The company designs its products with flexibility to accommodate many makes and models of automobiles and trucks. The company’s two main products are MaxiFlow and Alaska. MaxiFlow uses a few complex fabricated parts‚ but these have been found easy to assemble and test. On the other hand‚ Alaska uses many standard parts but has a complex assembly
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Using Overhead Transparencies by Lenny Laskowski © 1997 LJL Seminars http://www.ljlseminars.com While the current trend in the training industry is heading toward the use of the LCD Projector technology‚ the overhead projector is still the most popular presentation device used today. Most facilities have an overhead projector in every training room or conference room. Although it is the most widely used‚ it is also the biggest abused. Some presenters continue to misuse the overhead projector
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THE BUSINESS SITUATION Greetings Inc. has operated for many years as a nationally recognized retailer of greeting cards and small gift items. It has 1‚500 stores throughout the United States located in high-traffic malls. As the stock price of many other companies soared‚ Greetings’ stock price remained flat. As a result of a heated 2007 shareholders’ meeting‚ the president of Greetings‚ Robert Burns‚ came under pressure from shareholders to grow Greetings’ stock value. As a consequence
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Assignment 1. The overhead allocation rate used in the 1987 model year strategy study at the Automotive Component & Fabrication Plant (ACF) was 435% of direct labor dollar cost. Calculate the overhead allocation rate using the 1987 model year budget. Why do you get different numbers? 2. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have these changes occurred? 3. Consider two products
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SITTSL002A Assignment 1: Access and Interpret Product Information Question 1- Scenario Mr and Mrs Smythe and their close friend Ms White‚ wish to book on the Australian Pacific Tour of Perth and Monkey Mia‚ 6-Day Air/Coach/Air tour departing 31 July. * The Smythes would like a twin room and Ms White requires a single room. * Mr and Mrs Smythe will be travelling from the Gold Coast and Mrs White from Hobart. * Mr Smythe holds a Seniors Card. 1a) Plot on the map
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What Makes A Smile‚ Smile? A wise man said a good smile could light up the entire room. So what is the secret behind a good smile? There are many factors that play a crucial role in structuring a “good” smile. First and foremost‚ one needs to be aware that “facial beauty is based on the principles of symmetry‚ proper alignment‚ and proportions of the face” (Davis‚ 299). The notion of symmetry‚ proper alignment‚ and proportions of the face also transitions into a smile and how it’s formed. Don’t
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1. A company uses a predetermined overhead recovery rate based on machine hours. Budgeted factory overhead for a year amounted to £720 000‚ but actual factory overhead incurred was £738 000. During the year‚ the company absorbed £714 000 of factory overhead on 119 000 actual machine hours. What was the company’s budgeted level of machine hours for the year? A 116098 B 119000
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Manufacturing Overhead Name Institution Manufacturing Overhead Manufacturing overhead costs play a vital role in determining final cost of the product. Manufacturing overhead represents all the costs that the company incurs indirectly and not related to the cost of direct labor‚ direct materials or direct cost of machines (Donald‚ 2010). In short‚ companies are not able to trace these costs to individual items during the manufacturing process. Examples of overhead costs
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