Managerial Accounting Notes

Accounting chapter 7 managerial bill Exercises Lambert Fabrication, Inc. , uses action at law-based costing entropy for internal decisions. The company has the following four activity cost syndicates act Cost PoolAnnual Activity Producing units5,000 machine-hours Processing orders1,000 orders Customer support200 customers OtherNot applicable The Other activity cost pool consists of the cost of idle capacity and organization-sustaining be. The company traces the costs of direct materials and direct campaign to jobs (i. . , orders). Overhead costs two manufacturing and non-manufacturingare allocated to jobs using the activity-based costing system. These viewgraph costs are listed below Indirect grinder advantage$100,000 Other manufacturing overheadS200,000 marketing and administrative expense$400,000 To develop the companys activity-based costing system, employees were asked how they distributed their time and resources across the four activity cost pools. The results of tho se interviews appear below Results of Interviews of EmployeesDistribution of Resource Consumption Across Activities Producing Processing Customer UnitsOrdersSupportOtherTotals Indirect factory wages40%30%10%20%100% Other manufacturing overhead30%10%0%60%100% Selling and administrative expense0%25%40%35%100% a. Using the results of the interviews, carry out the first-stage allocation of costs to the activity cost pools. Producing Processing Customer UnitsOrdersSupportOtherTotals Indirect factory wages $ S S $ SOther manufacturing overhead Selling and administrative expense.. Total overhead cost $$ $___ ___ $ $__ ____ Chapter 7 b. Using the results of the first-stage allocation, compute the activity range for each of the activity cost pools. (Activity rates are not computed for the Other activity cost pool because these costs will not be allocated to products or customers. ) Computation of Activity commitsActivity Cost Pools Total CostTotal ActivityActivity Rate Producing units $ ma chine-hours $ per machine-hour Processing orders $ orders $ per order Customer support $ customers $per customer c. Data concerning one of the companys products are listed below harvesting W562 Selling price$100 Annual sales (units)1,000 Direct materials per unit$24 Direct labor per unit$6 Machine-hours per unit1. 5 Orders processed80 Using the activity rates you derived in part (b) supra and the above data, compute the total amount of overhead cost that would be allocated to product W562.Overhead Cost of harvest W562 Activity Cost PoolsActivity RateActivityABC Cost Producing units$per machine-hourmachine-hours$ Processing orders$per orderorders Customer support$per customerNot applicable Total $__________ d. Using the data developed above for product W562, complete the following report. Product MarginProduct W562 Sales$ cost Direct materials$ Direct labor Producing units Processing orders ________ Product margin $_______________