Preview

Broadening Your Prospective

Satisfactory Essays
Open Document
Open Document
389 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Broadening Your Prospective
Broadening Your Prospective 17-2 “Manager Perspective”
ACC/561
July 9, 2013

Broadening Your Prospective 17-2 “Managerial Perspective”
Activity Cost Pool Annual Cost
Market analysis $1,050,000
Product design 2,350,000
Product development 3,600,000
Prototype testing 1,400,000
Activities Cost Drivers Estimated Drivers
Market analysis Hours of analysis 15,000 hours
Product design Number of designs 2,500 designs
Product development Number of products 90 products
Prototype testing Number of tests 500 tests
1. Compute the activity-based overhead rate for each activity cost pool.
Activity-based overhead is determined by dividing estimated overhead by the estimated cost drivers.
Activity cost Pool Estimated Overhead / Cost drivers = ACB Overhead Rate
Market analysis 1,050,000 15,000 $70
Product Design 2,350,000 2,500 $940
Product development 3,600,000 90 $40,000
Prototype testing 1,400,000 500 $2,800

2. How much cost would be charged to an in-house manufacturing department that consumed 1,800 hours of market analysis time, was provided 280 designs relating to 10 products, and requested 92 engineering tests?
The total charged to an in-house manufacturing department would be $1,046,800. This dollar amount is determined by multiplying the overhead rates of each activity to the amount consumed for that activity and added together for a total. (1,800*70= 126,000), (280*940=263,200) (10*40,000=400,000), (2,800*92=257,600)

3. How much cost would serve as the basis for pricing an R&D bid with an outside company on a contract that would consume 800 hours of analysis time, require 178 designs relating to 3 products, and result in 70 engineering tests? $539,320 would serve as the basis for pricing an R&D bid with an outside company because that dollar amount is the breakeven point. (800*70=56,000), (178*940=167,320), (3*40,000= 120,000),

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Paint Pen

    • 374 Words
    • 2 Pages

    Q-1 What valuation(s) can we place on the business? What method(s) did you use to arrive at the valuation(s)?…

    • 374 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Negotiation Planning

    • 784 Words
    • 3 Pages

    1. 80 mm as TP ( If the deal succeeds, MD’s maximum profits would be 140 – 32 = 108, and minimum profits would be 20 – 32 mm = -12, so taking average of 108 and -12 and adding them to our opportunity cost ( 12 mm (development costs)+20 mm internal sales))…

    • 784 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    d) What is the cost of competing the project if its duration is what you…

    • 508 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    B- The next question that needs to be answered is, “How much cost would be charged to an in-house manufacturing department that consumed 1,800 hours of market analysis time, was provided 280 designs relating to 10 products, and request 92 engineering tests?” (Kimmel, 2011). Based on the chart in the textbook, the market analysis would be calculated by 70 multiplied by 1,800 hours…

    • 666 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    The same procedure was done for Part B. The DLHs were added (600000 hrs for the machine department and 200000 hrs for the fitting department), and multiplied by the overhead rate per labour hour, in order to find the overhead cost to be allocated to that department (£8275872). This result was finally divided by the units produced to give us the overhead cost per unit (£27.59).…

    • 1675 Words
    • 7 Pages
    Good Essays
  • Satisfactory Essays

    Jordan Company Solution

    • 257 Words
    • 2 Pages

    Required: a. Compute the budgeted factory overhead rate for Department X. b. Compute the budgeted factory overhead rate for Department Y. c. What is the total overhead cost of Job 10? d. If Job 10 consists of 50 units of product, what is the unit cost of this job? e. If Department Y incurred 42,000 machine hours (all billed out) and actual factory labor was $193,200, was the overhead under-applied or over-applied. By how much? Answer: a. $225,000/$180,000 = 125% b. c. d. e. $180,000/40,000 hrs. = $4.50 per hour ($11,000 x 125 percent) + ($4.50 x 3,000 hrs.) = $27,250 $10,000 + $16,000 + $11,000 + $14,000 + $27,250 = $78,250/50 units = $1,565 per unit. So divide each of the above by 50 to get the unit-cost structure. 42,000/units x $4.50/unit = 189,000. So under-applied by $4,200 (189,000 less 193,200)…

    • 257 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 607 would be:…

    • 2872 Words
    • 16 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Merton Truck

    • 820 Words
    • 4 Pages

    Direct Material + Direct Labor + Variable Overhead : 24000 + 4000 + 8000 = $36000…

    • 820 Words
    • 4 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Traditional Costing method: Take Widgets as an example, summing given direct labor 100,000, direct material 100,000 and overhead cost 200,000 (it is given that overhead cost equals to 200% of direct labor), we can get the total cost of Widgets is 400,000. By using same formula we can get the total costs of Gadgets, Smidgets, and Smadgets are 1,100,000, 1,350,000, and 850,000.…

    • 409 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    2. What kind of costs can your client expect (before your design or consulting fees)?…

    • 284 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Assume a traditional costing system applies the $80,000 of overhead costs based on direct labor hours.…

    • 301 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Purchase Orders

    • 558 Words
    • 3 Pages

    | Calculate the total overhead that should be allocated to each of the three activities.Number of Purchase $75,000, Number of square feet $150,000, Number of sales orders $75,000.…

    • 558 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Overhead Absorption

    • 397 Words
    • 2 Pages

    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.…

    • 397 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Moult Hall

    • 971 Words
    • 4 Pages

    IS THE ESTIMATED COST OF THE PROPOSAL PROJECT REASONABLE IN RELATION TO THE COST OF SIMILAR PROJECTS?…

    • 971 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Thesis Format

    • 736 Words
    • 3 Pages

    used, payback analysis, cost/benefits analysis (list all the expenses both current and proposed system), systems requirements (hardware/software), codes used…

    • 736 Words
    • 3 Pages
    Good Essays