ACC420-065 Spring 2022

Chapter 5 assignment Total 100 marks.

Instructions:

1. Ensure your name and student number are on EACH page of the assignment in the top right hand corner.

2. Clearly label each question and what part of the question you are answering. Round all calculations to two decimal places.

3. There are 4 questions totaling 100 marks.

4. This assignment must be submitted in a PDF format only. If you are using WORD or EXCEL you will have to print your assignment to Microsoft PDF Writer instead of selecting a printer. Make sure you re-size it to fit on 1 page wide only. For handwritten assignments, they must be scanned and also saved as a PDF document. All other submission formats will not be accepted.

5. NOTE: If I cannot read the assignment, I will not be able to mark it and students will receive a grade of 0.

6. This assignment is due May 23, 2022 at 11:59 pm and is worth 4% of your final grade - LATE submissions will not be accepted.

Question #1 (30 Marks)

Amherst Metal Works produces two types of metal lamps. Amherst manufactures 20,000 basic lamps and 5,000 designer lamps. Its activity-based costing system uses two indirect-cost pools. One cost pool is for setup costs and the other for general manufacturing overhead. Amherst allocates setup costs to the two lamps based on setup labour-hours and general manufacturing overhead costs on the basis of direct manufacturing labour-hours. It provides the following budgeted cost information.

Required: Calculate the total budgeted costs of the basic and designer lamps using Amherst's activity-based costing system.

1. What is the budgeted setup rate per hour? (3 marks)

2. What is the overhead rate for genera manufacturing overhead? (3 marks)

3. Now calculate the budgeted direct costs of basic and designer lamps if Amherst allocates overhead costs in each department using activity-based costing. Then complete the indirect allocation of costs for the basic and designer lamps. Lastly, in each case calculate the totals for both types of lamps combined. (24 marks)

Question #2 (36 Marks)

Payton Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows:

Required

1. Identify the cost hierarchy level for each cost category. (8 marks)

2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. (8 marks)

3. Calculate the budgeted cost per unit of cost driver for each cost category. (8 marks)

4. Calculate the budgeted total costs and cost per unit for each product line. (12 marks)

Question #3 (24 Marks)

Potvin Company produces mathematical and financial calculators and operates at capacity. Data related to the two products follows:

Required:

1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product. (15 marks)

2. Compute the manufacturing cost per unit for each product. (9 marks)

Question #4 (10 Marks)

In your own words, compare and contrast a Simple Costing System to that of an Activity-Based Costing System.

What are the

ACC420-065 Spring 2022

Chapter 5 assignment Total 100 marks.

Instructions:

1. Ensure your name and student number are on EACH page of the assignment in the top right hand corner.

2. Clearly label each question and what part of the question you are answering. Round all calculations to two decimal places.

3. There are 4 questions totaling 100 marks.

4. This assignment must be submitted in a PDF format only. If you are using WORD or EXCEL you will have to print your assignment to Microsoft PDF Writer instead of selecting a printer. Make sure you re-size it to fit on 1 page wide only. For handwritten assignments, they must be scanned and also saved as a PDF document. All other submission formats will not be accepted.

5. NOTE: If I cannot read the assignment, I will not be able to mark it and students will receive a grade of 0.

6. This assignment is due May 23, 2022 at 11:59 pm and is worth 4% of your final grade - LATE submissions will not be accepted.

Question #1 (30 Marks)

Amherst Metal Works produces two types of metal lamps. Amherst manufactures 20,000 basic lamps and 5,000 designer lamps. Its activity-based costing system uses two indirect-cost pools. One cost pool is for setup costs and the other for general manufacturing overhead. Amherst allocates setup costs to the two lamps based on setup labour-hours and general manufacturing overhead costs on the basis of direct manufacturing labour-hours. It provides the following budgeted cost information.

Required: Calculate the total budgeted costs of the basic and designer lamps using Amherst's activity-based costing system.

1. What is the budgeted setup rate per hour? (3 marks)

2. What is the overhead rate for genera manufacturing overhead? (3 marks)

3. Now calculate the budgeted direct costs of basic and designer lamps if Amherst allocates overhead costs in each department using activity-based costing. Then complete the indirect allocation of costs for the basic and designer lamps. Lastly, in each case calculate the totals for both types of lamps combined. (24 marks)

Question #2 (36 Marks)

Payton Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows:

Required

1. Identify the cost hierarchy level for each cost category. (8 marks)

2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. (8 marks)

3. Calculate the budgeted cost per unit of cost driver for each cost category. (8 marks)

4. Calculate the budgeted total costs and cost per unit for each product line. (12 marks)

Question #3 (24 Marks)

Potvin Company produces mathematical and financial calculators and operates at capacity. Data related to the two products follows:

Required:

1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product. (15 marks)

2. Compute the manufacturing cost per unit for each product. (9 marks)

Question #4 (10 Marks)

In your own words, compare and contrast a Simple Costing System to that of an Activity-Based Costing System.