Page 120: Brief Exercises 3-7 and
3-9
BE3-7 Trek Company has the following production data for April: units transferred
out 40,000, and ending work in process 5,000 units that are 100% complete for
materials and 40% complete for conversion costs. If unit materials cost is $4
and unit conversion cost is $7, determine the costs to be assigned to the units
transferred out and the units in ending work in process.
BE3-9 Data for Hollins Company
are given in BE3-8. Production records indicate that 18,000 units were
transferred out, and 2,000 units in ending work in process were 50% complete as
to conversion costs and 100% complete as to materials. Prepare a cost
reconciliation schedule.
Page 123: Exercise 3-7
E3-7 The Sanding Department of Quik Furniture Company has the following
production and manufacturing cost data for March 2017, the first month of
operation.
Production: 7,000 units finished
and transferred out; 3,000 units started that are 100% complete as to materials
and 20% complete as to conversion costs.
Manufacturing costs: Materials
$33,000; labor $21,000; and overhead $36,000.
Instructions
Prepare a production cost report.
Pages 164-165: Brief Exercise
4-2, and 4-8
BE4-2 Finney Inc. has conducted an analysis of overhead costs related
to one of its product lines using a traditional costing system (volume-based)
and an activity-based costing system. Here are its results.
Traditional Costing ABC
Sales revenue $600,000$600,000
Overhead costs:
Product RX3 $ 34,000$ 50,000
Product Y12 36,00020,000
$ 70,000$ 70,000
Explain how a difference in the
overhead costs between the two systems may have occurred.
BE4-8 Rich Novelty Company identified the following activities in its
production and support operations. Classify each of these activities as either
value-added or non–value-added.
(a) Machine setup. (d) Moving
work in process.
(b) Design engineering. (e)
Inspecting and testing.
(c) Storing inventory. (f)
Painting and packing.
Page 170: Exercise 4-8
E4-8 Wilmington, Inc. manufactures five models of kitchen appliances.
The company is installing activity-based costing and has identified the
following activities performed at its
Mesa plant.
1. Designing new models.
2. Purchasing raw materials and parts.
3. Storing and managing inventory.
4. Receiving and inspecting raw materials and
parts.
5. Interviewing and hiring new personnel.
6. Machine forming sheet steel into appliance
parts.
7. Manually assembling parts into appliances.
8. Training all employees of the company.
9. Insuring all tangible fixed assets.
10. Supervising production.
11. Maintaining and repairing machinery and
equipment.
12. Painting and packaging finished
appliances.
Having analyzed its Mesa plant
operations for purposes of installing activity-based costing, Wilmington, Inc.
identified its activity cost centers. It now needs to identify relevant
activity cost drivers in order to assign overhead costs to its products.
Instructions
Using the activities listed
above, identify for each activity one or more cost drivers that might be used
to assign overhead to Wilmington’s five products.
|
Activities
|
Cost driver(s)
|
|
1. Designing new models.
|
|
|
2. Purchasing raw materials and
parts.
|
|
|
3. Storing and managing
inventory.
|
|
|
4. Receiving and inspecting raw
materials and parts.
|
|
|
5. Interviewing and hiring new
personnel.
|
|
|
6. Machine forming sheet steel
into appliance parts.
|
|
|
7. Manually assembling parts
into appliances.
|
|
|
8. Training all employees of
the company.
|
|
|
9. Insuring all tangible fixed
assets.
|
|
|
10. Supervising production.
|
|
|
11. Maintaining and repairing machinery
and equipment.
|
|
|
12. Painting and packaging
finished appliances.
|
|
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