.Calculate the efficiency variance for variable setup overhead costs X Industries, Inc., produces air purifiers. X, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, X, Inc., must set up the machines and assembly line tooling. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and tooling for different models of the air purifiers. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2008: Budget Actual Amounts Amounts 10,000 Units produced and sold Batch size (number of units per batch) Setup-hours per batch Variable overhead cost per setup-hour Total fixed setup overhead costs 9,000 400 375 6 5.5 $50 $52 $18,000 $17,750 $114 favorable $264 unfavorable $264 favorable $150 favorable $250 favorable O

.Calculate the efficiency variance for variable setup overhead costs X Industries, Inc., produces air purifiers. X, Inc., produces the air purifiers in batches. To manufacture a batch of the purifiers, X, Inc., must set up the machines and assembly line tooling. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and tooling for different models of the air purifiers. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2008: Budget Actual Amounts Amounts 10,000 Units produced and sold Batch size (number of units per batch) Setup-hours per batch Variable overhead cost per setup-hour Total fixed setup overhead costs 9,000 400 375 6 5.5 $50 $52 $18,000 $17,750 $114 favorable $264 unfavorable $264 favorable $150 favorable $250 favorable O

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Description: .Calculate the efficiency variance for variable setup overhead costsX Industries, Inc., produces air purifiers. X, Inc., produces the air purifiers in batches. Tomanufacture a batch of the purifiers, X, Inc., must set up the machines and assembly li

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...

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Larsen, Inc., produces two types of electronic parts and has provided the following data: There are four activities: machining, setting up, testing, and purchasing. Required: 1. Calculate the activity consumption ratios for each product. 2. Calculate the consumption ratios for the plantwide rate (direct labor hours). When compared with the activity ratios, what can you say about the relative accuracy of a plantwide rate? Which product is undercosted? 3. What if the machine hours were used for the plantwide rate? Would this remove the cost distortion of a plantwide rate?
Bristol Fabricators, Inc., produces air purifiers in batches. To manufacture a batch of the purifiers, Bristol Fabricators, Inc., must set up the machines and assembly line tooling. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and tooling for different models of the air purifiers. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2020: E (Click the icon to view the information for June 2020.) Calculate the production-volume variance for fixed overhead setup costs. (Round all intermediary calculations to two decimal places and your final answer to the nearest whole number.) O A. $2,478 unfavorable O B. $2,478 favorable i Data Table C. $363 favorable O D. $363 unfavorable Budget Amounts Actual Amounts Units produced and sold…
If Power Products uses process costing, which of the follow-ing are likely to be true: a. The production processes are high volume.b. The products use different amounts of direct labor.c. The products are created with repetitive processes.d. The products are created to customer specifications.
Perez Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because of these product differences, the company wants to use activity-based costing to allocate overhead costs. It has identified four activity pools. Relevant information follows: b. Determine the overhead cost allocated to each product.
True or False "Setup costs should not be allocated directly to products via machine hours." The answer is True. The company should allocate setup costs to the batch of products that will run after the setup occurs. My question: Are setup costs allocated indirectly to products via machine hours? Please explain the answer thoroughly with examples.
LockTite Company produces two products, Pretty Safe (PS) and Virtually Impenetrable (VI). The following two tables give pertinent information about these products. Solve, a. What is the cost per unit of Pretty Safe if LockTite uses traditional overhead allocation based on number of units produced? b. What is the cost per unit of Pretty Safe if LockTite uses activity-based costing to allocate overhead?
Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwiderates to assign cost accurately.
Which of the following is most likely to be true of the manufacturing overhead costs assigned to a product with relatively low volume and high complexity? O a. An ABC system will assign the same manufacturing overhead costs to the product as a volume- based system. O b. Avolume-based system will assign more manufacturing overhead costs to the product than an ABC system. O c. An ABC system will assign more manufacturing overhead costs to the product than a volume-based system. O d. An ABC system will assign manufacturing overhead costs to the product, while a volume-based system will not. e to search W 11:35 A D A dx ENG 22-05-2021 hp 141 brt se delete home end 96 - backspace num ask lock T 7V 8A 94 home Dg up K enter 5 0 pause ↑ shift 11 end alt ctrl SUt
Central Perk, LLC, a manufacturer of coffee beans, is considering switching its operations to an Activity Based Costing system. The following manufacturing overhead activities and cost drivers have been identified: Activity. Machine setup Machine assembly Product inspection Product movement General factory Cost Driver Number of machine setups Machine hours logged Inspection hours logged Number of moves Machine hours logged Based on the above descriptions, which of the following correctly pairs the activity with its appropriate cost level? O A. Product Inspection... batch level cost OB. Product Movement... facility level cost O C. Machine Assembly... unit level cost O D. General Factory... batch level cost O E. Machine Setup... unit level cost
Which of the following is NOT true about a resource cost driver under Activity based costing? O a. Sales orders are used to assign the cost of machines O b. Resource cost driver is used to assign the cost of the resource to an activity OC. Number of purchased orders placed will determine the cost of purchasing the materials O d. Number of times machines are set up will determine their cost of setting up
Activity-Based Costing Both plantwide and departmental rates rely on unit-level drivers to assign overhead to products. However, not all overhead is caused by or related to units produced. Setup costs, for example, are incurred each time a batch is produced and a batch may consist of 1,000 units or 10,000 units. Setup costs tend to increase as batches increase—not as units produced increase. There are other factors, called non-unit drivers, which better measure the demand that products place on non-unit overhead activities. If non-unit overhead resources are a significant portion of total overhead, then using only unit-based drivers to assign overhead may create distorted product costs. Distorted product costs will not occur provided that products consume the non-unit overhead activities in (THE SAME PROPORTION/ DIFFERENT PROPORTIONS) as the unit-level activities. Product cost distortion requires that product diversity, which means simply that products consume overhead activities in…
As compared to a high-volume product, a low-volume product a. usually requires less special handling. b. is usually responsible for more overhead costs per unit. c. requires relatively fewer machine setups. d. requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead. ~ C An 4. W P