Classify as either unit-level, batch-level, product-level or organization-sustaining activity.
A. packing labor wages - unit level
b. materials handling labor wages - batch-level
- part administrators' salaries - product-level activity
- plant management salaries - organization-sustaining activity.
e. production scheduling staff salaries batch-level
f. cost of serving production equipment batch-level
g. property taxes for a plant site - organization-sustaining activity.
h. production expediters salaries - batch-level
i. insurance for plant facility - organization-sustaining activity.
j. plant security - organization-sustaining activity.
k. production workers' training product-level
l. cost of electricity to run production equipment- unit-level
Shambu Shoes is in the business of manufacturing basketball shoes. Accordingly the company uses the six activity cost pools listed below:
Activity Cost Pool Activity Measure
Maintenance Machine hours
Setups Setup hours
Cutting supervision Setup hours
Cutting depreciation Machine hours
Assembly supervision Direct labor hours
Assembly depreciation Machine hours
The company has already carried out its first-stage allocations of costs. The company's annual costs and activities are summarized as follows:
Activity Cost Pool Estimated Over-head Cost Expected Activity
Maintenance $150,000 50,000 Machine hours
Setups $450,000 300 Setup hours
Cutting supervision $270,000 300 Setup hours
Cutting depreciation $160,000 80,000 Machine hours
Assembly supervision $160,000 32,000 Direct labor hours
Assembly depreciation $ 20,000 80,000 Machine hours
Compute the activity rate for each of the activity cost pools: (Show Computations)
a. Maintenance
Activity Rate = $150000/50000 = $3 Per machine houre
b. Setups
Activity Rate = $450000/300 = $1500 per setup hour
c. Cutting supervision
Activity Rate = $270000/300 = $900 per setup hour
d. Cutting depreciation
Activity Rate = $160000/80000 = $2 per machine hour
e. Assembly supervision
Activity Rate=$160,000/32,000= $5 per Direct labor hours
f. Assembly depreciation
Acitivity Rate= $20,000/80,000= $0.25 per Machine hours
DS Company has identified the following cost pools and activity rates:
Activity Cost Pool Activity Rates
Supporting direct labor $4 per direct labor hour
Machine processing $3 per machine hour
Machine setups $30 per setup
Production orders $11 per order
Shipments $98 per shipment
Product sustaining $750 per product
Activity data have been supplied for the following products:
Total Expected Activity
D130 S150
Direct labor-hours 2,500 300
Machine hours 4,300 250
Machine setups 7 2
Production orders 3 2
Shipments 9 4
Product sustaining 2 1
Determine the total overhead cost that would be assigned to each of the products listed above in the activity based costing system: (Show computations and details)
a. D130
Activity Base Rate Total OH
Direct labor-hours 2,500 $4$10,000
Machine hours 4,300 $3$12,900
Machine setups 7 $30$210
Production orders 3 $11$33
Shipments 9 $98$882
Product sustaining 2 $750$1500
Total Overhead Cost$25,525
b. S150
Activity Base Rate Total OH
Direct labor-hours 300$4$1200
Machine hours 250$3$750
Machine setups 2$30$60
Production orders 2$11$22
Shipments 4$98$392
Product sustaining 1$750$750
Total Overhead Cost$3,174
Statues Inc. has the following sales budget for the second of the current year:
AprilMay June Total
Budgeted sales$250,000 $340,000 $590,000 $1,180,000
From past experience, the company has learned that 10% of a month's sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 30% are collected in the second month following sale. Bad debts are neglible and can be ignored. February sales totaled $150,000, and March sales totaled $220,000.
For each of the following months, calculate the amount of projected cash collections: (Show computations)
a. April
Projected Cash Collections = 250000*10% + 220000*60% + 150000*30% = $202,000
b. May
Projected Cash Collections = 340000*10% + 250000*60% + 220000*30% = $250,000
c. June
Projected Cash Collections = 590000*10% + 340000*60% + 250000*30% = $338,000
Valentino Company had the following budgeted sales over the last four months of the year:
Sales in Units
October 10,000
November 25,000
December 35,000
January 46,000
The company is now in the process of preparing a production budget for the fourth quarter. Past experience has shown that end-of-month inventories of finished goods must equal 20% of the next month's sales.
The inventory at the end of September is 2,000 units.
For each of the following months, calculate the number of units that need to be produced (Show computations)
Unit to be produced = Required Ending Inventory + Expected Sales – Opening Inventory
a. October
Unit to be produced = 25000*20% + 10000-2000 = 5000+10000-2000 = 13000 Units
b. November
Unit to be produced = 35000*20% + 25000 – 5000 = 7000+25000-5000 = 27000 Units
c. December
Unit to be produced = 46000*20% + 35000 – 7000 = 9200+35000-7000 = 37200 Units