Question

Noland Company manufactures two models of its banjo, the Basic and the Luxury. The Basic model...

Noland Company manufactures two models of its banjo, the Basic and the Luxury. The Basic model requires 10000 direct labor hours and the Luxury requires 30000 direct labor hours. The company produces 3400 units of the Basic model and 600 units of the Luxury model each year. The company inspects one Basic for every 100 produced, and inspects one Luxury for every 10 produced. The company expects to incur $1457000 of total inspecting costs this year. How much of the inspecting costs should be allocated to the Basic model using ABC costing?

A. $728500

B. $527000

C. $364250

D. $1238450

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Answer:
Number of Inspection for basic model
= Units Produced / Inspections
=   3,400 / 100
= 34 units
Number of Inspection for luxury model
= Units Produced / Inspections
=   600 / 10
= 60 units
Total number of inspected Units = 60 + 34   = 94
Allocation of inspection cost to Basic model
     =    (Total inspecting costs x Number of Inspection for basic model) /
                    / Total number of inspected Units
     =   $ 1,457,000 x 34 / 94
     =   $ 527,000
Inspecting costs allocated to the Basic model using ABC costing
    = $ 527,000
Option (B) is Correct
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Koontz Company manufactures two models of industrial components—a Basic model and an Advanced Model. The company...
Koontz Company manufactures two models of industrial components—a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz’s controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars):     Basic      Advanced      Total Number of units produced and sold      20,000  ...
Kima Company manufactures and sells two models of a home appliance. The Standard model is a...
Kima Company manufactures and sells two models of a home appliance. The Standard model is a basic appliance with mostly manual features, while the Galaxy model is highly automated. The appliances are produced to order, and there are no inventories at the end of the year. The cost accounting system at Kima allocates overhead to products based on direct labor cost. Overhead in year 1, which just ended, was $3,642,500. Other data for year 1 for the two products follow:...
Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two...
Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic. Activity Expected Costs Expected Activity Handling materials $ 625,000 100,000 parts Inspecting product 900,000 1,500 batches Processing purchase orders 105,000 700 orders Paying suppliers 175,000 500 invoices Insuring the factory 300,000 40,000 square feet Designing packaging 75,000 2 models     Required: 1. Compute a single plantwide overhead rate, assuming that the company assigns overhead based on 125,000 budgeted...
A company sells two models of a product—basic and premium. The basic model has a variable...
A company sells two models of a product—basic and premium. The basic model has a variable cost of $75 and sells for $100. The premium model has a variable cost of $100 and sells for $150. Fixed costs are $15,000. If the company usually sells 5,000 basic models and 2,500 premium models, then the break-even point in composite units is _________ units. What are the steps
Ellix Company manufactures two models of ultra-high fidelity speakers—the X200 model and the X99 model. Data...
Ellix Company manufactures two models of ultra-high fidelity speakers—the X200 model and the X99 model. Data regarding the two products follow: Product Direct Labor-Hours Annual Production Total Direct Labor-Hours X200 0.4 DLHs per unit 19,000 units 7,600 DLHs X99 0.6 DLHs per unit 48,000 units 28,800 DLHs 36,400 DLHs Additional information about the company follows: a. Model X200 requires $44 in direct materials per unit, and model X99 requires $20. b. The direct labor workers are paid $40 per hour....
Ficcus Inc. manufactures two types of products, the Gx and the Tx models. The company operates...
Ficcus Inc. manufactures two types of products, the Gx and the Tx models. The company operates five days per week and makes a net profit of $125 on the Gx model, and $175 on the Tx model. The models are manufactured in two main departments: production and assembly. The production department has 58 skilled workers, each of whom works 7 hours per day. The assembly department has 25 workers, who also work a 7-hour shift. On an average, to produce...
Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator....
Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow: Basic Dominator Total Units produced 1,250 150 1,400 Machine-hours 4,000 1,000 5,000 Direct labor-hours 2,000 1,000 3,000 Direct materials costs $ 9,000 $ 4,250 $ 13,250 Direct labor costs 64,000 37,000 101,000 Manufacturing overhead costs 174,225 Total costs $ 288,475 Required: Compute the individual product costs per unit assuming that Tiger Furnishings uses direct labor costs...
Chandler Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Chandler expects to...
Chandler Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Chandler expects to incur $360,000 of overhead costs during the next fiscal year. Other budget information follows. Vogue Beauty Glamour Total Direct labor hours 2,000 4,000 6,000 12,000 Machine hours 1,200 1,400 1,400 4,000 If you use direct labor hours as the cost driver, what is the allocation rate per direct labor hour? Do not enter dollar signs or commas in your answers.
1. Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the...
1. Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow: Basic Dominator Total Units produced 1,200 450 1,650 Machine-hours 3,600 2,000 5,600 Direct labor-hours 3,300 2,900 6,200 Direct materials costs $ 11,300 $ 3,800 $ 15,100 Direct labor costs 69,400 36,100 105,500 Manufacturing overhead costs 168,000 Total costs $ 288,600 Required: Compute the predetermined overhead rate assuming that Tiger Furnishings uses machine-hours to allocate overhead...
Chan Company identified the following activities, costs, and activity drivers for this year. The company manufactures...
Chan Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: fast and standard. Activity Expected Costs Activity Driver Handling materials $ 665,000 190,000 parts Inspecting product 1,188,000 2,160 batches Processing purchase orders 150,000 1,250 orders Paying suppliers 220,000 880 invoices Insuring the factory 390,000 50,000 square feet Designing packaging 84,000 2 models 1. Compute a single plantwide overhead rate assuming that the company assigns overhead based on 145,000 budgeted direct...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT