* Words banks for the above Q15 through Q21:Absorbed, Actual, Budgeted, Common cost, Controllable cost, Cost,Full, Market price, Negotiated transfer price, Profit, Standards,Transfer price, Variable, & Variance.
15.) When the amount assigned to a responsibility center issignificantly influenced by the actions of someone within theresponsibility center, the item of cost is a_____________________.
16. In a _____________ cost system,every unit of product moving along the production line bears thesame amount of overhead cost, regardless of how much time itactually takes to process a particular unit.
17. In _______________ costing, nofixed overhead costs are charged to individual units of product, sono overhead rate for the fixed component of overhead costs need beused in the cost accounting system.
18. A cost that is incurred to supporta number of costing objects but cannot be traced to themindividually is a ___________________.
19. _______________is often regardedas the best approach to the transfer pricing problem, particularlyif transfer price negotiations routinely become bogged down.
20. A _______________ is simply thedifference between a predetermined norm or standard and the____________ results. Management wants to know not only what theamounts of the differences were but also, and more important, whythese occurred to take corrective action.
21. A _______________ center is anybusiness segment whose manger has control over both cost andrevenue. However, it generally does not have control overinvestment funds.
* Words banks for theabove Q15 through Q21: Absorbed, Actual, Budgeted, Common cost,Controllable cost, Cost, Full, Market price, Negotiated transferprice, Profit, Standards, Transfer price, Variable, &Variance.
* Words banks for the above Q15 through Q21:Absorbed, Actual, Budgeted, Common cost, Controllable cost, Cost,Full, Market price, Negotiated transfer price, Profit, Standards,Transfer price, Variable, & Variance.
15.) When the amount assigned to a responsibility center issignificantly influenced by the actions of someone within theresponsibility center, the item of cost is a_____________________.
16. In a _____________ cost system,every unit of product moving along the production line bears thesame amount of overhead cost, regardless of how much time itactually takes to process a particular unit.
17. In _______________ costing, nofixed overhead costs are charged to individual units of product, sono overhead rate for the fixed component of overhead costs need beused in the cost accounting system.
18. A cost that is incurred to supporta number of costing objects but cannot be traced to themindividually is a ___________________.
19. _______________is often regardedas the best approach to the transfer pricing problem, particularlyif transfer price negotiations routinely become bogged down.
20. A _______________ is simply thedifference between a predetermined norm or standard and the____________ results. Management wants to know not only what theamounts of the differences were but also, and more important, whythese occurred to take corrective action.
21. A _______________ center is anybusiness segment whose manger has control over both cost andrevenue. However, it generally does not have control overinvestment funds.
* Words banks for theabove Q15 through Q21: Absorbed, Actual, Budgeted, Common cost,Controllable cost, Cost, Full, Market price, Negotiated transferprice, Profit, Standards, Transfer price, Variable, &Variance.
Related questions
Hi-Tek Manufacturing Inc. makes two types of industrial component partsâthe B300 and the T500. An absorption costing income statement for the most recent period is shown below:
| Hi-Tek Manufacturing Inc. Income Statement | |||
| Sales | $ | 1,761,600 | |
| Cost of goods sold | 1,249,034 | ||
| Gross margin | 512,566 | ||
| Selling and administrative expenses | 580,000 | ||
| Net operating loss | $ | (67,434) | |
Hi-Tek produced and sold 60,300 units of B300 at a price of $21 per unit and 12,700 units of T500 at a price of $39 per unit. The companyâs traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the companyâs two product lines is shown below:
| B300 | T500 | Total | ||||||||||
| Direct materials | $ | 400,500 | $ | 162,200 | $ | 562,700 | ||||||
| Direct labor | $ | 120,000 | $ | 42,700 | 162,700 | |||||||
| Manufacturing overhead | 523,634 | |||||||||||
| Cost of goods sold | $ | 1,249,034 | ||||||||||
The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tekâs ABC implementation team concluded that $55,000 and $101,000 of the companyâs advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the companyâs manufacturing overhead to four activities as shown below:
| Manufacturing | Activity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Activity Cost Pool (and Activity Measure) | Overhead | B300 | T500 | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Machining (machine-hours) | $ | 209,884 | 90,600 | 62,600 | 153,200 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Setups (setup hours) | 152,650 | 75 | 280 | 355 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product-sustaining (number of products) | 100,600 | 1 | 1 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other (organization-sustaining costs) | 60,500 | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total manufacturing overhead cost | $ | 523,634 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hi-Tek Manufacturing Inc. makes two types of industrial component partsâthe B300 and the T500. An absorption costing income statement for the most recent period is shown below: |
| Hi-Tek Manufacturing Inc. Income Statement | ||
| Sales | $ | 1,751,700 |
| Cost of goods sold | 1,223,464 | |
| Gross margin | 528,236 | |
| Selling and administrative expenses | 560,000 | |
| Net operating loss | $ | (31,764) |
| Hi-Tek produced and sold 60,200 units of B300 at a price of $21 per unit and 12,500 units of T500 at a price of $39 per unit. The companyâs traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the companyâs two product lines is shown below: |
| B300 | T500 | Total | ||||
| Direct materials | $ | 401,000 | $ | 162,400 | $ | 563,400 |
| Direct labor | $ | 120,900 | $ | 42,400 | 163,300 | |
| Manufacturing overhead | 496,764 | |||||
| Cost of goods sold | $ | 1,223,464 | ||||
| The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tekâs ABC implementation team concluded that $58,000 and $107,000 of the companyâs advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the companyâs manufacturing overhead to four activities as shown below: |
| Manufacturing | Activity | ||||||||||||||||
| Activity Cost Pool (and Activity Measure) | Overhead | B300 | T500 | Total | |||||||||||||
| Machining (machine-hours) | $ | 209,884 | 90,400 | 62,800 | 153,200 | ||||||||||||
| Setups (setup hours) | 125,580 | 79 | 220 | 299 | |||||||||||||
| Product-sustaining (number of products) | 100,800 | 1 | 1 | 2 | |||||||||||||
| Other (organization-sustaining costs) | 60,500 | NA | NA | NA | |||||||||||||
| Total manufacturing overhead cost | $ | 496,764 | |||||||||||||||
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| 2. | Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) | |||||||||||
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3.)
| Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answer to 1 decimal place. (i.e. .1234 should be entered as 12.3) and other answers to nearest whole dollar amounts.)
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