4. A 5. C 6. a‚ b 7. A 8. B 9. c‚ d 10. B 11. a‚ b 9-29 (25 min.) Denominator-level problem 1. Budgeted fixed manufacturing overhead costs rates: Budgeted Fixed Budgeted Fixed Denominator Manufacturing Budgeted Manufacturing Level Capacity Overhead per Capacity Overhead Cost ------------------------------------------------- Concept Period Level Rate Theoretical $4‚560‚000 3‚600 $1‚266.67 Practical 4‚560‚000 2‚400 1‚900.00
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currently have the lowest gross margin among all products‚ because competitors had been reducing prices on pumps and Wilkerson adopted its prices in order to remain competitive and to maintain the volume. 2. Given some apparent problems with Wilkersons cost system‚ should executives abandon overhead assignment to products entirely by adopting a contribution margin approach in which manufacturing overhead is treated as a period expense? Our conclusion is‚ that they should not adopt a contribution margin
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understand the reason‚ you need to understand the definitions of period costs and product costs. Period costs are not a necessary part of the manufacturing process. Rather they are costs associated with the selling part of the business or its administrative overhead. These costs are expensed in the period in which they occur. Product costs are the direct materials‚ direct labor and overhead associated with making the company’s product. If a unit is not sold‚ these costs are reported as part of the
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have done above is a “full-cost” analysis. This is in contrast to a “direct-cost” analysis that ignores overhead costs. Is full cost the right metric for job profitability and customer profitability? What assumptions are we making about the variability of overhead costs when we do a “full-cost” analysis? By allocating the overhead costs to jobs and customers there is an implicit assumption that these are variable with the cost driver. In reality‚ some of the overhead costs are fixed‚ at least in the
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COST ACCOUNTING P 15-35 Required: 1. Using selling prices‚ allocate the $1‚000 gateway-package revenue to the three divisions using: a. The stand-alone revenue-allocation method | Selling Price | Rev. Allocation | Precio por cuarto para dos personas 2 noches | $800 | $581.82 | Dos “rounds” de golf con precio de | 375 | 272.73 | Una cena para dos | 200 | 145.45 | | $1‚375 | $1‚000 | b. The incremental revenue-allocation method | Selling Price | Rev. Allocation
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products. Chuck questioned if the current cost-management system was providing the management with accurate data about product costs. In a traditional‚ volume-based product-costing system‚ only a single predetermine overhead rate is used. All manufacturing-overhead costs are combined into one cost pool‚ a grouping of individual indirect cost items‚ and they are applied to products on the basis of a single variable that costs over a given time span (cost driver) that is closely related to production
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Q: Is depreciation expense or depreciation cost is fixed cost or variable cost in nature? Fixed costs: Fixed costs are such costs that do not change with the change in activity level within the relevant range. Where relevant range can be defined in terms of time or activity level. Variable costs: Variable costs are such costs that change with the change in activity level . Coming to the question‚ depreciation expense or depreciation cost can either be fixed or variable and this depends on the
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Topic 6: Management Accounting and Cost Case: Shelter Partnership a. My main learning outcomes from Topic 6 and the Case Study; 1) Firstly‚ I realize management accounting has much to offer. Somehow I can handle physics but not accounting. Now thanks to this course I can appreciate and make sense of it. The bit that really caught my attention was seeing how management accounting can be really useful for business planning‚ cost management‚ budgeting and performance measurement. It offers
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Plant overhead $122‚000 D/L rate/hour $30 Youngstown has a traditional cost system. It calculates a plant-wide overhead rate by dividing total overhead costs by total direct labor hours. Assume‚ for the calculations below‚ that plant overhead is a committed (fixed) cost during the year‚ but that direct labor is a variable cost. 1. Calculate the plant-wide overhead rate. Use this rate to assign overhead costs to products and calculate the profitability of the four products. The assignment
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3 Cost-Volume-Profit Analysis Learning Objectives 1. Explain the features of cost-volumeprofit (CVP) analysis 2. Determine the breakeven point and output level needed to achieve a target operating income 3. Understand how income taxes affect CVP analysis 4. Explain how managers use CVP analysis in decision making 5. Explain how sensitivity analysis helps managers cope with uncertainty 6. Use CVP analysis to plan variable and fixed costs 7. Apply CVP analysis to a company producing multiple
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