Kya, Inc. manufactures two models of high-pressure steam valves, the XR7 model and the ZD5 model....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Kya, Inc. manufactures two models of high-pressure steam valves, the XR7 model and the ZD5 model. Budgeted manufacturing overhead cost and operating data regarding production and sales of 2,000 units of the XR7 model and 8,000 units of the ZD5 model for 2005 follow: Activity Cost Pool Machine setups Vendor negotiations Assembly Total Budgeted Overhead Costs Cost Driver $800,000 Number of setups 200,000 Number of parts 400,000 Direct labour hours $1,400,000 Budgeted Level for Cost Driver XR7 150 800 ZD5 100 200 4,000 36,000 Total 250 1,000 40,000 1. Identify and briefly explain each of the three cost drivers as either unit-level or batch-level or product-level or organization-sustaining level. (3 marks) 2. Calculate the budgeted manufacturing overhead cost for each unit of the two models, using only one unit-level cost driver. (5 marks) 3. Calculate the budgeted manufacturing overhead cost for each unit of the two models, using the activity-based-costing (ABC) method. (10 marks) 4. Assume Kya, Inc. will use only the unit-level driver. Compared to the ABC method, by how much (in terms of total allocated / applied manufacturing overhead cost), if any, will the total output of each model be either under-costed or over-costed? Kya, Inc. manufactures two models of high-pressure steam valves, the XR7 model and the ZD5 model. Budgeted manufacturing overhead cost and operating data regarding production and sales of 2,000 units of the XR7 model and 8,000 units of the ZD5 model for 2005 follow: Activity Cost Pool Machine setups Vendor negotiations Assembly Total Budgeted Overhead Costs Cost Driver $800,000 Number of setups 200,000 Number of parts 400,000 Direct labour hours $1,400,000 Budgeted Level for Cost Driver XR7 150 800 ZD5 100 200 4,000 36,000 Total 250 1,000 40,000 1. Identify and briefly explain each of the three cost drivers as either unit-level or batch-level or product-level or organization-sustaining level. (3 marks) 2. Calculate the budgeted manufacturing overhead cost for each unit of the two models, using only one unit-level cost driver. (5 marks) 3. Calculate the budgeted manufacturing overhead cost for each unit of the two models, using the activity-based-costing (ABC) method. (10 marks) 4. Assume Kya, Inc. will use only the unit-level driver. Compared to the ABC method, by how much (in terms of total allocated / applied manufacturing overhead cost), if any, will the total output of each model be either under-costed or over-costed?
Expert Answer:
Answer rating: 100% (QA)
Question 1 Particulars Classification 1 Machine Setups Batch Level Cost 2 Vendor Negotiation Product Level Cost 3 Assembly Unit Level Cost Explanation... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
The Lifang Wu Corporation manufactures two models of industrial robots, the Alpha 1 and the Beta 2. The firm employs 5 technicians, working 160 hours each per month, on its assembly line. Management...
-
Briefly explain each of the three perspectives of human nature.
-
Identify and briefly explain each of the principal objectives that auditors hope to accomplish by preparing audit work-papers. How were these objectives undermined by Deloittes decision to alter...
-
A money market portfolio has a market value of $20,000,000 and its value will change by $500 for a change in short-term yields of one basis point. The eurodollar futures contract has a tick size of...
-
Erin Hamill is the owner/operator of a tanning salon. She is considering four price levels for a weekly tanning pass. Her estimate of price and quantity demanded are: PriceQuantity Demanded $11.00...
-
Different types of posting errors are identified in following table. For each, indicate (a) Trial balance will balance, (b) The amount of the difference if the trial balance will not balance, (c) The...
-
Find the area to the right of 40.256 under the chi-square distribution with 30 degrees of freedom.
-
Natalia Wallace is the new controller for Smart Software, Inc., which develops and sells education software. Shortly before the December 31 fiscal year- end, James Cauvet, the company president, asks...
-
1 - The management of KADJI expects to receive cash revenues of $120m, $180m and $300m four, five and six years from now, respectively.KADJI can earn an annual return of 5%, compounded annually, on...
-
Pulsar Optics produces medical lasers for use in hospitals. The accounts and their balances appear in the ledger of Pulsar Optics on April 30 of the current year as follows: Preferred 1% Stock, $120...
-
It has recently been discovered that based on feedback received that the expectation of some clients and customers are not being adequately met. What are some of the methods that can be used to...
-
On January 1 , 2 0 0 9 , Korman Company purchased 9 % bonds having a maturity value of $ 1 , 0 0 0 , 0 0 0 for $ 9 6 2 , 0 0 0 . The bonds provide the bondholders with a 1 0 % yield. The coupon is...
-
The bar AB has a pin support at C and is attached to a cable (AD) at A. The bar is subjected to a vertical load of 33 N at B. Determine the tension in the cable AD knowing that a = A 10 cm to D a 12...
-
SoonerCo. is engaged in a transfer pricing scheme with its international affiliate. It sells goods from the foreign affiliate to the US company at a high price to record more income in the lower tax...
-
The unadjusted balance for inventory is $ 1 9 5 0 0 as of December 3 1 , 2 0 2 3 . TBCS uses a perpetual inventory system to account for inventory. Below is a breakdown of inventory on hand on...
-
On January 1 , 2 0 2 2 , Don Buchanan purchases a business that he will carry on as a sole proprietor. The purchase price includes $ 6 0 , 0 0 0 for goodwill. The business has a fiscal period that...
-
X, Y, and Z refer to three Boolean variables whose value can be 0 or 1. Simplify given Boolean expressions using axioms and theorems of Boolean algebra. The simplified expressions need to be in a...
-
Research corporate acquisitions using Web resources and then answer the following questions: Why do firms purchase other corporations? Do firms pay too much for the acquired corporation? Why do so...
-
Climate-Control, Inc., manufactures a variety of heating and air-conditioning units. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a...
-
Frankel Ltd., a British merchandising company, is the exclusive distributor of a product that is gaining rapid market acceptance. The companys revenues and expenses (in British pounds) for the last...
-
Prentice Company is considering dropping one of its product lines. What costs of the product line would be relevant to this decision? Irrelevant?
-
Prove: 'Bernoulli's equation is a restrictive form of energy equation'.
-
What are the assumption made for the establishment of Bernoulli's equation?
-
A shell and tube heat exchanger is used to cool lubricating oil by water at the rate of \(120 \mathrm{~kg} / \mathrm{min}\). The oil enters the heat exchanger at \(343 \mathrm{~K}\) and leaves at...
Study smarter with the SolutionInn App