Business, 21.03.2020 02:15 gretchcampbell
Luxury Furniture designs and builds factory-made, premium, wood armoires for homes. All are of white oak. Its budgeted manufacturing overhead costs for the year 2017 are as follows.
Overhead Cost Pools
Amount
Purchasing
$ 45,000
Handling materials
50,000
Production (cutting, milling, finishing)
130,000
Setting up machines
85,000
Inspecting
60,000
Inventory control (raw materials and finished goods)
80,000
Utilities
100,000
Total budgeted overhead costs
$550,000
For the last 4 years, Luxury Furniture has been charging overhead to products on the basis of materials cost. For the year 2017, materials cost of $500,000 were budgeted. Jim Brigham, owner-manager of Luxury Furniture, recently directed his accountant, Bob Borke, to implement the activity-based costing system that he has repeatedly proposed. At Jim Brigham’s request, Bob and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools.
Overhead Cost Pools
Activity Cost Drivers
Expected
Use of
Cost Drivers
Purchasing
Number of orders
500
Handling materials
Number of moves
5,000
Production (cutting, milling, finishing)
Direct labor hours
65,000
Setting up machines
Number of setups
1,000
Inspecting
Number of inspections
4,000
Inventory control (raw materials and finished goods)
Number of components
40,000
Utilities
Square feet occupied
50,000
Debbie Steiner, sales manager, has received an order for 12 luxury armoires from Thom’s Interior Design. At Debbie’s request, Bob prepares cost estimates for producing 12 armoires so Debbie can submit a contract price per armoire to Thom’s. He accumulates the following data for the production of 12 armoires.
Direct materials
$5,200
Direct labor
$3,500
Direct labor hours
200
Number of purchase orders
3
Number of material moves
32
Number of machine setups
4
Number of inspections
20
Number of components
640
Number of square feet occupied 320
Instructions:
(a) Compute the predetermined overhead rate using traditional costing with materials cost as the basis.
(b) What is the manufacturing cost per armoire under traditional costing?
(c) What is the manufacturing cost per armoire under the proposed activity-based costing? (Prepare all of the necessary schedules.)
(d) Which of the two costing systems is preferable in pricing decisions and why?
Answers: 2
Business, 21.06.2019 18:40
Reactive power generation has the following capital structure. its corporate tax rate is 40%. security market value required rate of return debt $ 30 million 4 % preferred stock 30 million 6 common stock 40 million 10 what is its wacc? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.)
Answers: 2
Business, 21.06.2019 23:00
Which of the following statements is correct? large corporations are taxed more favorably than sole proprietorships. corporate stockholders are exposed to unlimited liability. due to limited liability, unlimited lives, and ease of ownership transfer, the vast majority of u.s. businesses (in terms of number of businesses) are organized as corporations. most businesses (by number and total dollar sales) are organized as partnerships or proprietorships because it is easier to set up and operate in one of these forms rather than as a corporation. however, if the business gets very large, it becomes advantageous to convert to a corporation, mainly because corporations have important tax advantages over proprietorships and partnerships. most business (measured by dollar sales) is conducted by corporations in spite of large corporations’ often less favorable tax treatment, due to legal considerations related to ownership transfers and limited liability.
Answers: 3
Business, 22.06.2019 03:30
When the federal reserve buys and sells bonds to member banks, it is called a. monetary policy b. reserve ratio c. interest rate adjustment d. open market operations
Answers: 2
Business, 22.06.2019 12:00
Agovernment receives a gift of cash and investments with a fair value of $200,000. the donor specified that the earnings from the gift must be used to beautify city-owned parks and the principal must be re-invested. the $200,000 gift should be accounted for in which of the following funds? a) general fund b) private-purpose trust fund c) agency fund d) permanent fund
Answers: 1
Luxury Furniture designs and builds factory-made, premium, wood armoires for homes. All are of white...
Mathematics, 21.04.2020 19:20
Health, 21.04.2020 19:20
Computers and Technology, 21.04.2020 19:20
Arts, 21.04.2020 19:20
Mathematics, 21.04.2020 19:20
Social Studies, 21.04.2020 19:20
History, 21.04.2020 19:20
Mathematics, 21.04.2020 19:20
History, 21.04.2020 19:21