Company LSD LTD has 4 types of overhead. The four categories and expected costs for each...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Company LSD LTD has 4 types of overhead. The four categories and expected costs for each category for next year are listed below Setups $150,000 Inspection Maintenance Material Handling Actual overhead Cost $90,000 $120,000 $ 82,000 $30,000 Estimates for the proposed job [Job #23] are as follows Direct Materials $6,000 $10,000 DL (1000 hours) Machine Hours # of material moves 500 12 # of setups # of inspections 2 10 The company has been asked to submit a bid for a proposed job. The plant manager thinks getting this job would result in new business in future years . Usually bids are based upon full manufacturing cost plus 30%. In the past, full manufacturing cost has been calculated by allocating overhead using volume based cost driver [[DLH]. The plant manager has heard of a new way of applying overhead that uses cost pools and cost drivers. Quality Inspections Expected activity for the four activity based cost drivers that would be used are : Machine Hours Material Moves Setups 35,000 4,600 3,500 5,000 I 1. Calculate the predetermined rates using the activity based costing. 2. Determine the amount of overhead that would be applied to the proposed project if activity based drivers are used 3. Determine the total cost of the proposed job using ABC 4. What bid price is the company going to use according to its policy? 5. Has the company over-applied or under-applied ? How did you come to this conclusion? Question 3. Theory Questions A. Differentiate between Functional based Costing and Activity based costing B. What are the weaknesses of Functional based costing? C. Give two examples of unit level drivers and two examples of non-unit level drivers D. Mention three assumptions of CVP analysis E. Explain what the following measures indicate to the managers: i. Margin of Satety mould I Company LSD LTD has 4 types of overhead. The four categories and expected costs for each category for next year are listed below Setups $150,000 Inspection Maintenance Material Handling Actual overhead Cost $90,000 $120,000 $ 82,000 $30,000 Estimates for the proposed job [Job #23] are as follows Direct Materials $6,000 $10,000 DL (1000 hours) Machine Hours # of material moves 500 12 # of setups # of inspections 2 10 The company has been asked to submit a bid for a proposed job. The plant manager thinks getting this job would result in new business in future years . Usually bids are based upon full manufacturing cost plus 30%. In the past, full manufacturing cost has been calculated by allocating overhead using volume based cost driver [[DLH]. The plant manager has heard of a new way of applying overhead that uses cost pools and cost drivers. Quality Inspections Expected activity for the four activity based cost drivers that would be used are : Machine Hours Material Moves Setups 35,000 4,600 3,500 5,000 I 1. Calculate the predetermined rates using the activity based costing. 2. Determine the amount of overhead that would be applied to the proposed project if activity based drivers are used 3. Determine the total cost of the proposed job using ABC 4. What bid price is the company going to use according to its policy? 5. Has the company over-applied or under-applied ? How did you come to this conclusion? Question 3. Theory Questions A. Differentiate between Functional based Costing and Activity based costing B. What are the weaknesses of Functional based costing? C. Give two examples of unit level drivers and two examples of non-unit level drivers D. Mention three assumptions of CVP analysis E. Explain what the following measures indicate to the managers: i. Margin of Satety mould I
Expert Answer:
Answer rating: 100% (QA)
ANSWER ANSWER 1 SOLUTION 2 SOLUTION 3 SOLUTION 4 QUESTION 3 A Functional Based Costing FBC and ActivityBased Costing ABC are two costing systems used ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
A firm values goodwill under 'Capitalisation of Profits' method. Average profit of the firm for past 4 years has been determined at Z 1,00,000 (before tax). Capital employed in the business is Z...
-
Douglas Company has been asked to submit a bid on supplying gas masks to the Pentagon. The companys current cost structure per mask is as follows: Direct materials . . . . . . . . . . . . . . . . . ....
-
Write a python program that reads a string S containing integers and prints the maximum number of toys Robert has to buy for Charlie . . Input : 5 1 2 2 4 5 1 2 2 4 Output : 3 3
-
An experiment was conducted to observe the effect of an increase in temperature on the potency of an antibiotic. Three one ounce portions of the antibiotic were stored for equal lengths of time at...
-
Mr. and Mrs. Kitchens purchased their first home in Ohio for $135,000 on October 1, 2015. Because Mr. Kitchens employer transferred him to Utah, they sold the house for $160,000 on January 10, 2016....
-
What are the minimum energies of the two oppositely directed gamma rays in a PET procedure?
-
On November 10, 2015, Lee Co. began operations by purchasing coffee grinders for resale. Lee uses the perpetual inventory method. The grinders have a 60-day warranty that requires the company to...
-
Suppose i have a data X1.....Xn. What are the steps needed to fit my data into a Gamma distribution using MOM estimation and find the estimate, SE and bias(based on 10000iterations) for alpha and...
-
The following diagram represents a high-temperature reaction between CH4 and H2O. Based on this reaction, how many moles of each product can be obtained starting with 4.0 mol CH4?
-
Currently, 15-year mortgage rate is 5.30% (with monthly payments); and 30-year mortgage rate is 6.35% (with monthly payments). Consider a house with a price of $400,000. a. Compare these two rates in...
-
Analyze the impact of entrepreneurial activity on sustainable development.
-
Explain why these numbers differ across cultures, countries, and industries.
-
What is the definition of a culture?
-
What is the role of the pizza aquarium concept in Al Capizzas business model? In your opinion, how will millennials perceive this?
-
Provide a road map of how Al Capizza could compete globally.
-
Explain four ways services differ from goods. Show how each characteristic could apply to a desirable vacation resort in Costa Rica (or other travel destination of your choice). How could the resort...
-
A 6-lb shell moving with a velocity ?? v0k explodes at point D into three fragments which hit the vertical wall at the points indicated. Fragments A, B, and C hit the wall 0.010 s, 0.018 s, and 0.012...
-
Digital Software, Inc., has two product lines. The income statement for the year ended December 31 shows the following: The products, Num 1 and Num 2, are sold in two territories, North and South, as...
-
The following data appeared in the accounting records of Royale Manufacturing Company, which uses an average cost production system: Started in process . . . . . . . . . . . . . . . . . . . . . . . ....
-
Budgeted selling and administrative expenses for Cruise Tire Company in P7-2 for the year ended December 31, 2011, were as follows: Advertising expense . . . . . . . . . . . . . . . . . . . . . . . ....
-
Canada removed all duties and quotas on imports from Bangladesh in 2003. Since that time, Bangladesh has become the second largest source (after India) of Canadian merchandise imports from South...
-
A firm has the cost curve \(C(q)=100+150 q-\) \(46 q^{2}+5 q^{3}\). What are the equations of the firm's marginal cost, average variable cost, and average cost curves? What are the minimum values of...
-
A firm in Saudi Arabia uses capital and labor in its production process. The hourly cost of labor is SR30 and the initial rental rate of capital is SR60 per hour. What is the firm's isocost line? How...
Study smarter with the SolutionInn App