The question of the usefulness of cost allocations (discretionary accruals and management compensation plans) has been introduced in this and previous chapters. What, if anything, would you do about (fixed) cost allocations? Donât forget to consider political costs.
The question of the usefulness of cost allocations (discretionary accruals and management compensation plans) has been introduced in this and previous chapters. What, if anything, would you do about (fixed) cost allocations? Donât forget to consider political costs.
Related questions
43.
Consider the following production and cost data for twoproducts, L and C: |
| Product L | Product C | |
| Contribution marginper unit | $35 | $40 |
| Machine-hours neededper unit | 7 hours | 5 hours |
The company can only perform 14,700 machine hours each period,due to limited skilled labor and there is unlimited demand for eachproduct. What is the largest possible total contribution marginthat can be realized each period? |
rev: 01_23_2015_QC_CS-5061
a. $103,340
b. $117,600
c. $132,300
d. $102,900
45.
Ollivier Corporation has an activity-based costing system withthree activity cost pools-Processing, Supervising, and Other. Inthe first stage allocations, costs in the two overhead accounts,equipment expense and indirect labor, are allocated to the threeactivity cost pools based on resource consumption. Data used in thefirst stage allocations follow: |
| Overhead costs: | |
| Equipmentexpense | $73,000 |
| Indirect labor | $6,900 |
| Distribution of Resource Consumption Across Activity Cost Pools: | |||
Activity Cost Pools | |||
| Processing | Supervising | Other | |
| Equipmentexpense | 0.40 | 0.40 | 0.20 |
| Indirect labor | 0.40 | 0.50 | 0.10 |
Processing costs are assigned to products using machine-hours(MHs) and Supervising costs are assigned to products using thenumber of batches. The costs in the Other activity cost pool arenot assigned to products. Activity data for the company's twoproducts follow: |
| Activity: | ||
| MHs(Processing) | Batches(Supervising) | |
| Product C4 | 10,900 | 920 |
| Product L7 | 1,780 | 1,430 |
| Total | 12,680 | 2,350 |
What is the overhead cost assigned to Product L7 underactivity-based costing? (Round your intermediatecalculations to 2 decimal places and your final answer to nearestwhole dollar.) |
a. $24,348
b. $4,486
c. $34,326
d. $19,863
46.
HarrisCorporation produces a single product. Last year, Harrismanufactured 26,030 units and sold 20,700 units. Production costsfor the year were as follows: |
| Fixed manufacturingoverhead | $494,570 |
| Variablemanufacturing overhead | $210,843 |
| Direct labor | $143,165 |
| Directmaterials | $192,622 |
Sales were $983,250, for the year, variable selling andadministrative expenses were $120,060, and fixed selling andadministrative expenses were $161,386. There was no beginninginventory. Assume that direct labor is a variable cost. |
The contribution margin per unit would be: (Do not roundintermediate calculations.) |
a. $21.80 per unit
b. $26.50 per unit
c. $16.20 per unit
d. $20.70 per unit
