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Denny Asbestos Removal Company removes potentially toxic asbestos insulation

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Denny Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. The company's estimator has been involved in a long-simmering dispute with the on-site work supervisors. The on-site supervisors claim that the estimator does not adequately distinguish between routine work such as removal of asbestos insulation around heating pipes in older homes and nonroutine work such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe that nonroutine work is far more expensive than routine work and should bear higher customer charges. The estimator sums up his position in this way: "My job is to measure the area to be cleared of asbestos. As directed by top management, I simply multiply the square footage by $4,000 per thousand square feet to determine the bid price. Since our average cost is only $3,000 per thousand square feet, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart.";To shed light on this controversy, the company initiated an activity-based costing study of all of its costs. Data from the activity-based costing system follow;Activity Cost Pool Activity Measure Total Activity;Removing asbestos Thousands of square feet 500 thousand square feet;Estimating and job setup Number of jobs 200 jobs*;Working on nonroutine jobs Number of nonroutine jobs 25 nonroutine jobs;Other (costs of idle capacity and organization- sustaining costs) Not applicable, these costs are not allocated to jobs;*The total number of jobs includes nonroutine jobs as well as routine jobs. Nonroutine jobs as well as routine jobs require estimating and setup work.;Wages and salaries $ 200,000;Disposal fees 600,000;Equipment depreciation 80,000;On-site supplies 60,000;Office expenses 190,000;Licensing and insurance 370,000;Total cost $ 1,500,000;Distribution of Resource Consumption;Across Activity Cost Pools;Removing Asbestos Estimating and Job Setup Working on Nonroutine Jobs Other Total;Wages and salaries 40 % 10 % 35 % 15 % 100 %;Disposal fees 70 % 0 % 30 % 0 % 100 %;Equipment depreciation 50 % 0 % 40 % 10 % 100 %;On-site supplies 55 % 15 % 20 % 10 % 100 %;Office expenses 10 % 40 % 30 % 20 % 100 %;Licensing and insurance 50 % 0 % 40 % 10 % 100 %;Requirement 1;Perform the first-stage allocation of costs to the activity cost pools. (Leave no cells blank - be certain to enter "0" wherever required.;Removing Asbestos Estimating;and Job;Setup Working on Nonroutine;Jobs Other Total;Wages and salaries $ ____________ $ ____________ $ ____________ $ ____________ $;Disposal fees;Equipment depreciation;On-site supplies;Office expenses;Licensing and insurance;Total cost $ ____________ $ ____________ $ ____________ $ ____________ $;Requirement 2;Compute the activity rates for the activity cost pools.;Activity Cost Pool Activity Rate;Removing asbestos $ ____________ per thousand square feet;Estimating and job setup $ ____________ per job;Working on nonroutine jobs $ ____________ per nonroutine job;Requirement 3;Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system. (Round the average cost to 2 decimal places.;(a) A routine 2,000-square-foot asbestos removal job.;Total cost of the job $;Average cost per thousand square feet $;(b) A routine 4,000-square-foot asbestos removal job.;Total cost of the job $;Average cost per thousand square feet $;(c) A nonroutine 2,000-square-foot asbestos removal job.;Total cost of the job $;Average cost per thousand square feet $;Erte, Inc., manufactures two models of high-pressure steam valves, the XR7 model and the ZD5 model. Data regarding the two products follow;Product Direct labor hours Annual;production Total Direct;Labor Hours;XR7 0.2 DLHs per unit 20,000 Units 4,000 DLHs;ZD5 0.4 DLHs per unit 40,000 Units 16,000 DLHs;20,000 DLHs;Additional information about the company follows;a. Product XR7 requires $35 in direct materials per unit, and product ZD5 requires $25.;b. The direct labor rate is $20 per hour.;c. The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products. Manufacturing overhead totals $1,480,000 per year.;d. Product XR7 is more complex to manufacture than product ZD5 and requires the use of a special milling machine.;e. Because of the special work required in (d) above, the company is considering the use of activity based costing to apply overhead cost to products. Three activity cost pools have been identified and the first-stage allocations have been completed. Data concerning these activity cost pools appear below;Estimated Total Activity;Activity Cost Pool Activity Measure Estimated;Total Cost XR7 ZDS Total;Machine setups Number of setups $ 180,000 150 100 250;Special milling Machine-hours 300,000 1,000 0 1,000;General factory Direct labor-hours 1,000,000 4,000 16,000 20,000;$ 1,480,000;Requirement 1;Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products.;(a) Compute the predetermined overhead rate.;Predetermined overhead rate $ ____________ Per DLH;(b) Determine the unit product cost of each product.. Round your answers to 2 decimal places.);Model;XR7 ZDS;Total Unit product Cost $ ____________ $;Requirement 2;Assume that the company decides to use activity-based costing to apply overhead cost to products.;(a) Compute the activity rate for each activity cost pool. Also compute the amount of overhead cost that would be applied to each product. (Leave no cells blank - be certain to enter "0" wherever required. Round the Overhead cost per unit to 2 decimal places.;Activity cost Pool Activity Rate;Machine setups $ ____________ Per set up;Special milling $ ____________ Per MH;General factory $ ____________ Per DLH;Model XR7;Activity Cost Pool Overhead;Applied;Machine setups $;Special milling;General factory;Total manufacturing overhead cost $;Overhead cost per unit $;Model ZD5;Activity Cost Pool Overhead;Applied;Machine setups $;Special milling;General factory;Total manufacturing overhead cost $;Overhead cost per unit;(b) Determine the unit product cost of each product.. Round your answers to 2 decimal places.);Unit product cost of Model XR7 $;Unit product cost of Model ZD5 $;AnimPix, Inc., is a small company that creates computer-generated animations for films and television. Much of the company's work consists of short commercials for television, but the company also does realistic computer animations for special effects in movies.;The young founders of the company have become increasingly concerned with the economics of the business-particularly since many competitors have sprung up recently in the local area. To help understand the company's cost structure, an activity-based costing system has been designed. Three major activities are carried out in the company: animation concept, animation production, and contract administration. The animation concept activity is carried out at the contract proposal stage when the company bids on projects. This is an intensive activity that involves individuals from all parts of the company in creating storyboards and prototype stills to be shown to the prospective client. After the client has accepted a project, the animation goes into production and contract administration begins. Technical staff do almost all of the work involved in animation production, whereas the administrative staff is largely responsible for contract administration. The activity cost pools and their activity measures and rates are listed below;Activity Cost Pool Activity Measure Activity Rate;Animation concept Number of proposals $ 5,300 per proposal;Animation production Minutes of animation $ 7,900 per minute of animation;Contract administration Number of contracts $ 5,600 per contract;These activity rates include all of the costs of the company, except for the costs of idle capacity and organization-sustaining costs. There are no direct labor or direct materials costs.;Preliminary analysis using these activity rates has indicated that the local commercials segment of the market may be unprofitable. This segment is highly competitive. Producers of local commercials may ask several companies like AnimPix to bid, which results in an unusually low ratio of accepted contracts to bids. Furthermore, the animation sequences tend to be much shorter for local commercials than for other work. Since animation work is billed at standard rates according to the running time of the completed animation, the revenues from these short projects tend to be below average. Data concerning activity in the local commercials market appear below;Activity Measure Local Commercials;Number of proposals 24;Minutes of animation 15;Number of contracts 6;The total sales for local commercials amounted to $230,000.;Requirement 1;Determine the cost of the local commercials market. (Think of the local commercials market as a product.);Activity Cost Pool ABC Cost;Animation concept $;Animation production;Contract administration;Total Cost $;Requirement 2;Compute the product margin of the local commercials market. (Remember, this company has no direct materials or direct labor costs.) (Negative amount should be indicated by a minus sign.;Product margin $;Gore Range Carpet Cleaning is a small, family-owned business operating out of Eagle-Vail, Colorado. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.35 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on more remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below;Activity Cost Pool Activity Measure Activity for the Year;Cleaning carpets Square feet cleaned (00s) 14,000 hundred square feet;Travel to jobs Miles driven 49,500 miles;Job support Number of jobs 1,800 jobs;Other (costs of idle capacity and organization-sustaining costs) None Not applicable;The total cost of operating the company for the year is $353,000, which includes the following costs;Wages $ 149,000;Cleaning supplies 22,000;Cleaning equipment depreciation 10,000;Vehicle expenses 38,000;Office expenses 58,000;President's compensation 76,000;Total cost $353,000;Resource consumption is distributed across the activities as follows;Distribution of Resource Consumption;Across Activity Cost Pools;Cleaning Carpets Travel to Jobs Job Support Other Total;Wages 78 % 12 % 0 % 10 % 100 %;Cleaning supplies 100 % 0 % 0 % 0 % 100 %;Cleaning equipment depreciation 66 % 0 % 0 % 34 % 100 %;Vehicle expenses 0 % 81 % 0 % 19 % 100 %;Office expenses 0 % 0 % 59 % 41 % 100 %;President's compensation 0 % 0 % 33 % 67 % 100 %;Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.;Requirement 1;Prepare the first-stage allocation of costs to the activity cost pools. (Leave no cells blank - be certain to enter "0" wherever required.;Distribution of Resource Consumption;Across Activity Cost Pools;Cleaning Carpets Travel to Jobs Job Support Other Total;Wages $ ____________ $ ____________ $ ____________ $ ____________ $;Cleaning supplies;Cleaning equipment depreciation;Vehicle expenses;Office expenses;President's compensation;Total $ ____________ $ ____________ $ ____________ $ ____________ $;Requirement 2;Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.;Activity Cost Pool Activity Rate;Cleaning carpets $ ____________ per hundred square feet;Travel to jobs $ ____________ per mile;Job support $ ____________ per job;Requirement 3;The company recently completed a 10 hundred square-foot carpet-cleaning job at the Lazy Bee Ranch-a 55-mile round-trip journey from the company's offices in Eagle-Vail. Compute the cost of this job using the activity-based costing system. (Round your answers to 2 decimal places.;Activity Cost Pool ABC Cost;Cleaning carpets $;Travel to jobs $;Job support $;Total $;Requirement 4;The revenue from the Lazy Bee Ranch was $233.5 (10 hundred square-feet at $23.35 per hundred square feet). Compute the margin from this job. (Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.;Product Margin $;Requirement 5;What do you conclude concerning the profitability of the Lazy Bee Ranch job?;(a) Gore Range Carpet Cleaning appears to be gaining money on the Lazy Bee Ranch job.;(b) Gore Range Carpet Cleaning appears to be losing money on the Lazy Bee Ranch job.;Pro Golf Corporation produces private label golf clubs for pro shops throughout North America. The company uses activity-based costing to evaluate the profitability of serving its customers. This analysis is based on categorizing the company's costs as follows, using the ease of adjustment color coding scheme described in Appendix 8A;Ease of;Adjustment Code;Direct materials Green;Direct labor Yellow;Indirect labor Yellow;Factory equipment depreciation Red;Factory administration Red;Selling and administrative wages and salaries Red;Selling and administrative depreciation Red;Marketing expenses Yellow;Management would like to evaluate the profitability of a particular customer-the Peregrine Golf Club of Eagle, Colorado. Over the last 12 months this customer submitted 2 order for 86 golf clubs that had to be produced in 3 batches due to differences in product labeling requested by the customer. Summary data concerning the order appear below;Number of clubs 86;Number of orders 2;Number of batches 3;Direct labor-hours per club 0.35;Selling price per club $ 48;Direct materials cost per club $ 25.4;Direct labor rate per hour $ 22.5;A cost analyst working in the controller's office at the company has already produced the action analysis cost matrix for the Peregrine Golf Club that follows;Action Analysis Cost Matrix for Peregrine Golf Club;Activity Cost Pools;Volume Batch Processing Order Processing Customer Service;Activity 24;direct labor-hours 3;batches 2;order 1;customer Total;Manufacturing overhead;Indirect labor $ 38.6 $ 52.6 $ 5.4 $ 0 $ 96.6;Factory equipment depreciation 103.8 0.7 0 0 104.5;Factory administration 16.8 0.6 14 222 253.4;Selling and administrative overhead;Wages and salaries 14 0 32 396 442;Depreciation 0 0 4 20 24;Marketing expenses 116.8 0 56 368 540.8;Total $ 290 $ 53.9 $ 111.4 $ 1,006 $ 1,461.3;Prepare an action analysis report showing the profitability of the Peregrine Golf Club. (Round your answers to 2 decimal places. Negative amount should be indicated by a minus sign.;Sales $;Green costs;Direct materials $;Green margin;Yellow costs;Direct labor;Indirect labor;Marketing expenses;Yellow margin;Red costs;Factory equipment depreciation;Factory administration;Selling and administrative wages and salaries;Selling and administrative depreciation;Red margin $;Top of Form;Denny Asbestos Removal Company removes potentially toxic asbestos;insulation and related products from buildings. The company's estimator;has been involved in a long-simmering dispute with the on-site work;supervisors. The on-site supervisors claim that the estimator does not;adequately distinguish between routine work such as removal of asbestos;insulation around heating pipes in older homes and nonroutine work such;as removing asbestos-contaminated ceiling plaster in industrial;buildings. The on-site supervisors believe that nonroutine work is far;more expensive than routine work and should bear higher customer;charges. The estimator sums up his position in this way: "My job is to;measure the area to be cleared of asbestos. As directed by top;management, I simply multiply the square footage by $4,000 per thousand;square feet to determine the bid price. Since our average cost is only;$3,000 per thousand square feet, that leaves enough cushion to take care;of the additional costs of nonroutine work that shows up. Besides, it is;difficult to know what is routine or not routine until you actually;start tearing things apart.";To shed light on this controversy, the company initiated an;activity-based costing study of all of its costs. Data from the;activity-based costing system follow;Activity Cost Pool;Activity Measure;Total Activity;Removing asbestos;Thousands of square feet;500;thousand square feet;Estimating and job setup;Number of jobs;200;jobs*;Working on nonroutine jobs;Number of nonroutine jobs;25;nonroutine jobs;Other (costs of idle capacity and organization- sustaining costs);Not applicable, these costs are not allocated to jobs;?;?;*The total number of jobs includes nonroutine jobs as well as routine;jobs. Nonroutine jobs as well as routine jobs require estimating and;setup work.;?;?;?;Wages and salaries;$;200,000;Disposal fees;?;600,000;Equipment depreciation;?;80,000;On-site supplies;?;60,000;Office expenses;?;190,000;Licensing and insurance;?;370,000;Total cost;$;1,500,000;?;Distribution of Resource Consumption;Across Activity Cost Pools;?;Removing Asbestos;Estimating and Job Setup;Working on Nonroutine Jobs;Other;Total;Wages and salaries;?;40;%;?;?;10;%;?;?;35;%;?;?;15;%;?;?;100;%;?;Disposal fees;?;70;%;?;?;0;%;?;?;30;%;?;?;0;%;?;?;100;%;?;Equipment depreciation;?;50;%;?;?;0;%;?;?;40;%;?;?;10;%;?;?;100;%;?;On-site supplies;?;55;%;?;?;15;%;?;?;20;%;?;?;10;%;?;?;100;%;?;Office expenses;?;10;%;?;?;40;%;?;?;30;%;?;?;20;%;?;?;100;%;?;Licensing and insurance;?;50;%;?;?;0;%;?;?;40;%;?;?;10;%;?;?;100;%;?;Requirement 1;Perform the first-stage allocation of costs to the activity cost pools.;(Leave no cells blank - be certain to enter "0" wherever required.;?;Removing Asbestos;Estimating;and Job;Setup;Working on Nonroutine;Jobs;Other;Total;Wages and salaries;$;$;$;$;$;Disposal fees;?;?;?;?;?;Equipment depreciation;?;?;?;?;?;On-site supplies;?;?;?;?;?;Office expenses;?;?;?;?;?;Licensing and insurance;?;?;?;?;?;Total cost;$;$;$;$;$;Requirement 2;Compute the activity rates for the activity cost pools.;Activity Cost Pool;Activity Rate;Removing asbestos;$;per thousand square feet;Estimating and job setup;$;per job;Working on nonroutine jobs;$;per nonroutine job;Requirement 3;Using the activity rates you have computed, determine the total cost and;the average cost per thousand square feet of each of the following jobs;according to the activity-based costing system. (Round the average cost;to 2 decimal places.;(a);A routine 2,000-square-foot asbestos removal job.;Total cost of the job;$;Average cost per thousand square feet;$;(b);A routine 4,000-square-foot asbestos removal job.;Total cost of the job;$;Average cost per thousand square feet;$;(c);A nonroutine 2,000-square-foot asbestos removal job.;Total cost of the job;$;Average cost per thousand square feet;$;Erte, Inc., manufactures two models of high-pressure steam valves, the;XR7 model and the ZD5 model. Data regarding the two products follow;Product;Direct labor hours;Annual;production;Total Direct;Labor Hours;XR7;0.2;DLHs per unit;20,000;Units;4,000;DLHs;ZD5;0.4;DLHs per unit;40,000;Units;16,000;DLHs;?;?;?;?;?;20,000;DLHs;Additional information about the company follows;a.;Product XR7 requires $35 in direct materials per unit, and product ZD5;requires $25.;b.;The direct labor rate is $20 per hour.;c.;The company has always used direct labor-hours as the base for applying;manufacturing overhead cost to products. Manufacturing overhead totals;$1,480,000 per year.;d.;Product XR7 is more complex to manufacture than product ZD5 and requires;the use of a special milling machine.;e.;Because of the special work required in (d) above, the company is;considering the use of activity based costing to apply overhead cost to;products. Three activity cost pools have been identified and the;first-stage allocations have been completed. Data concerning these;activity cost pools appear below;?;?;?;?;Estimated Total Activity;Activity Cost Pool;Activity Measure;Estimated;Total Cost;XR7;ZDS;Total;Machine setups;Number of setups;$;180,000;150;100;250;Special milling;Machine-hours;?;300,000;1,000;0;1,000;General factory;Direct labor-hours;?;1,000,000;4,000;16,000;20,000;?;?;$;1,480,000;?;?;?;Requirement 1;Assume that the company continues to use direct labor-hours as the base;for applying overhead cost to products.;(a);Compute the predetermined overhead rate.;Predetermined overhead rate;$;Per DLH;(b);Determine the unit product cost of each product.. Round your answers to;2 decimal places.);?;Model;?;XR7;ZDS;Total Unit product Cost;$;$;Requirement 2;Assume that the company decides to use activity-based costing to apply;overhead cost to products.;(a);Compute the activity rate for each activity cost pool. Also compute the;amount of overhead cost that would be applied to each product. (Leave no;cells blank - be certain to enter "0" wherever required. Round the;Overhead cost per unit to 2 decimal places.;Activity cost Pool;Activity Rate;Machine setups;$;Per set up;Special milling;$;Per MH;General factory;$;Per DLH;Model XR7;Activity Cost Pool;Overhead;Applied;Machine setups;$;Special milling;?;General factory;?;Total manufacturing overhead cost;$;Overhead cost per unit;$;Model ZD5;Activity Cost Pool;Overhead;Applied;Machine setups;$;Special milling;?;General factory;?;Total manufacturing overhead cost;$;Overhead cost per unit;?;(b);Determine the unit product cost of each product.. Round your answers to;2 decimal places.);Unit product cost of Model XR7;$;Unit product cost of Model ZD5;$;AnimPix, Inc., is a small company that creates computer-generated;animations for films and television. Much of the company's work consists;of short commercials for television, but the company also does realistic;computer animations for special effects in movies.;The young founders of the company have become increasingly concerned;with the economics of the business???particularly since many competitors;have sprung up recently in the local area. To help understand the;company's cost structure, an activity-based costing system has been;designed. Three major activities are carried out in the company;animation concept, animation production, and contract administration.;The animation concept activity is carried out at the contract proposal;stage when the company bids on projects. This is an intensive activity;that involves individuals from all parts of the company in creating;storyboards and prototype stills to be shown to the prospective client.;After the client has accepted a project, the animation goes into;production and contract administration begins. Technical staff do almost;all of the work involved in animation production, whereas the;administrative staff is largely responsible for contract administration.;The activity cost pools and their activity measures and rates are listed;below;Activity Cost Pool;Activity Measure;Activity Rate;Animation concept;Number of proposals;$;5,300 per proposal;Animation production;Minutes of animation;$;7,900 per minute of animation;Contract administration;Number of contracts;$;5,600 per contract;These activity rates include all of the costs of the company, except for;the costs of idle capacity and organization-sustaining costs. There are;no direct labor or direct materials costs.;Preliminary analysis using these activity rates has indicated that the;local commercials segment of the market may be unprofitable. This;segment is highly competitive. Producers of local commercials may ask;several companies like AnimPix to bid, which results in an unusually low;ratio of accepted contracts to bids. Furthermore, the animation;sequences tend to be much shorter for local commercials than for other;work. Since animation work is billed at standard rates according to the;running time of the completed animation, the revenues from these short;projects tend to be below average. Data concerning activity in the local;commercials market appear below;Activity Measure;Local Commercials;Number of proposals;24;Minutes of animation;15;Number of contracts;6;The total sales for local commercials amounted to $230,000.;Requirement 1;Determine the cost of the local commercials market. (Think of the local;commercials market as a product.);Activity Cost Pool;ABC Cost;Animation concept;$;Animation production;Contract administration;Total Cost;$;Requirement 2;Compute the product margin of the local commercials market. (Remember;this company has no direct materials or direct labor costs.) (Negative;amount should be indicated by a minus sign.;Product margin;$;Gore Range Carpet Cleaning is a small, family-owned business operating;out of Eagle-Vail, Colorado. For its services, the company has always;charged a flat fee per hundred square feet of carpet cleaned. The;current fee is $23.35 per hundred square feet. However, there is some;question about whether the company is actually making any money on jobs;for some customers???particularly those located on more remote ranches;that require considerable travel time. The owner's daughter, home for;the summer from college, has suggested investigating this question using;activity-based costing. After some discussion, a simple system;consisting of four activity cost pools seemed to be adequate. The;activity cost pools and their activity measures appear below;Activity Cost Pool;Activity Measure;Activity for the Year;Cleaning carpets;Square feet cleaned (00s);14,000;hundred square feet;Travel to jobs;Miles driven;49,500;miles;Job support;Number of jobs;1,800;jobs;Other (costs of idle capacity and organization-sustaining costs);None;Not applicable;The total cost of operating the company for the year is $353,000, which;includes the following costs;?;?;?;Wages;$;149,000;Cleaning supplies;?;22,000;Cleaning equipment depreciation;?;10,000;Vehicle expenses;?;38,000;Office expenses;?;58,000;President's compensation;?;76,000;Total cost;?;$353,000;Resource consumption is distributed across the activities as follows;?;Distribution of Resource Consumption;Across Activity Cost Pools;?;?;Cleaning Carpets;Travel to Jobs;Job Support;Other;Total;Wages;?;78;%;?;?;12;%;?;?;0;%;?;?;10;%;?;?;100;%;?;Cleaning supplies;?;100;%;?;?;0;%;?;?;0;%;?;?;0;%;?;?;100;%;?;Cleaning equipment depreciation;?;66;%;?;?;0;%;?;?;0;%;?;?;34;%;?;?;100;%;?;Vehicle expenses;?;0;%;?;?;81;%;?;?;0;%;?;?;19;%;?;?;100;%;?;Office expenses;?;0;%;?;?;0;%;?;?;59;%;?;?;41;%;?;?;100;%;?;President's compensation;?;0;%;?;?;0;%;?;?;33;%;?;?;67;%;?;?;100;%;?;Job support consists of receiving calls from potential customers at the;home office, scheduling jobs, billing, resolving issues, and so on.;Requirement 1;Prepare the first-stage allocation of costs to the activity cost pools.;(Leave no cells blank - be certain to enter "0" wherever required.;?;Distribution of Resource Consumption;Across Activity Cost Pools;?;Cleaning Carpets;Travel to Jobs;Job Support;Other;Total;Wages;?;$;?;?;$;?;?;$;?;?;$;?;?;$;?;Cleaning supplies;?;?;?;?;?;?;?;?;?;?;?;?;?;?;?;Cleaning equipment depreciation;?;?;?;?;?;?;?;?;?;?;?;?;?;?;?;Vehicle expenses;?;?;?;?;?;?;?;?;?;?;?;?;?;?;?;Office expenses;?;?;?;?;?;?;?;?;?;?;?;?;?;?;?;President's compensation;?;?;?;?;?;?;?;?;?;?;?;?;?;?;?;Total;?;$;?;?;$;?;?;$;?;?;$;?;?;$;?;Requirement 2;Compute the activity rates for the activity cost pools. (Round your;answers to 2 decimal places.;Activity Cost Pool;Activity Rate;Cleaning carpets;$;per hundred square feet;Travel to jobs;$;per mile;Job support;$;per job;Requirement 3;The company recently completed a 10 hundred square-foot carpet-cleaning;job at the Lazy Bee Ranch???a 55-mile round-trip journey from the;company's offices in Eagle-Vail. Compute the cost of this job using the;activity-based costing system. (Round your answers to 2 decimal places.;Activity Cost Pool;ABC Cost;Cleaning carpets;$;Travel to jobs;$;Job support;$;Total;$;Requirement 4;The revenue from the Lazy Bee Ranch was $233.5 (10 hundred square-feet;at $23.35 per hundred square feet). Compute the margin from this job.;(Round your answer to 2 decimal places. Negative amount should be;indicated by a minus sign.;Product Margin;$;Requirement 5;What do you conclude concerning the profitability of the Lazy Bee Ranch;job?;(a);Gore Range Carpet Cleaning appears to be gaining money on the Lazy Bee;Ranch job.;(b);Gore Range Carpet Cleaning appears to be losing money on the Lazy Bee;Ranch job.;Pro Golf Corporation produces private label golf clubs for pro shops;throughout North America. The company uses activity-based costing to;evaluate the profitability of serving its customers. This analysis is;based on categorizing the company's costs as follows, using the ease of;adjustment color coding scheme described in Appendix 8A;?;Ease of;Adjustment Code;Direct materials;Green;Direct labor;Yellow;Indirect labor;Yellow;Factory equipment depreciation;Red;Factory administration;Red;Selling and administrative wages and salaries;Red;Selling and administrative depreciation;Red;Marketing expenses;Yellow;Management would like to evaluate the profitability of a particular;customer???the Peregrine Golf Club of Eagle, Colorado. Over the last 12;months this customer submitted 2 order for 86 golf clubs that had to be;produced in 3 batches due to differences in product labeling requested;by the customer. Summary data concerning the order appear below;?;?;?;Number of clubs;?;86;Number of orders;?;2;Number of batches;?;3;Direct labor-hours per club;?;0.35;Selling price per club;$;48;Direct materials cost per club;$;25.4;Direct labor rate per hour;$;22.5;A cost analyst working in the controller's office at the company has;already produced the action analysis cost matrix for the Peregrine Golf;Club that follows;Action Analysis Cost Matrix for Peregrine Golf Club;?;?;?;Activity Cost Pools;?;?;Volume;Batch Processing;Order Processing;Customer Service;?;Activity;24;direct labor-hours;3;batches;2;order;1;customer;Total;Manufacturing overhead;?;?;?;?;?;?;?;?;?;?;?;Indirect labor;$;38.6;?;$;52.6;$;5.4;$;0;$;96.6;Factory equipment depreciation;?;103.8;?;?;0.7;?;0;?;0;?;104.5;Factory administration;?;16.8;?;?;0.6;?;14;?;222;?;253.4;Selling and administrative overhead;?;?;?;?;?;?;?;?;?;?;?;Wages and salaries;?;14;?;?;0;?;32;?;396;?;442;Depreciation;?;0;?;?;0;?;4;?;20;?;24;Marketing expenses;?;116.8;?;?;0;?;56;?;368;?;540.8;Total;$;290;?;$;53.9;$;111.4;$;1,006;$;1,461.3;Prepare an action analysis report showing the profitability of the;Peregrine Golf Club. (Round your answers to 2 decimal places. Negative;amount should be indicated by a minus sign.;?;?;?;?;Sales;?;?;$;Green costs;?;?;?;?;Direct materials;$;?;Green margin;?;?;?;Yellow costs;?;?;?;?;Direct labor;?;?;?;Indirect labor;?;?;?;Marketing expenses;?;?;Yellow margin;?;?;?;Red costs;?;?;?;?;Factory equipment depreciation;?;?;?;Factory administration;?;?;?;Selling and administrative wages and salaries;?;?;?;Selling and administrative depreciation;?;?;Red margin;?;?;$;Bottom of Form

 

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