Description of this paper

Devry ACCT434 Week 1 Activity Based Costing Another

Description

solution


Question

Question;Problem 1 - Aunt Ethel's Fancy Cookie Company manufactures and sells three;flavors of cookies: macaroon, sugar, and buttercream. The batch size for;the cookies is limited to 1,000 cookies based on the size of the ovens and;cookie molds owned by the company. Based on budgetary projections, the;information listed below is available;Buttercream;Macaroon Sugar;Projected sales in;units 500,000 800,000;600,000;PER UNIT data;Selling;price;$0.80;$0.75;$0.60;Direct;materials;$0.20;$0.15;$0.14;Direct;labor;$0.04;$0.02;$0.02;Hours per 1,000-unit batch;Direct labor hours;2;1;1;Oven;hours;1;1;1;Packaging;hours;0.5;0.5;0.5;Total overhead costs and activity levels for the year are;estimated as follows;Activity;Overhead costs;Activity levels;Direct;labor;2,400 hours;Oven;$120,000;1,900 hours;Packaging;$150,000;950 hours;Total;$270,000;Questions;1.;Determine the activity-cost-driver rate for packaging costs (three;points).;1.;Using the ABC system, for the sugar cookie, compute the estimated;overhead costs per 1,000 cookies (three points).1.;Using the ABC system, for the sugar cookie, compute the estimated;operating profit per 1,000 cookies (three points).1.;Using a traditional system (with direct labor hours as the;overhead allocation base) for the sugar cookie, compute the estimated overhead;costs per 1,000 cookies (three points).2.;Using a traditional system (with direct labor hours as the;overhead allocation base) for the sugar cookie, compute the estimated operating;profit per 1,000 cookies (3 points).3.;Explain the difference between the profits obtained from the;traditional system and the ABC system. Which system provides a better;estimate of profitability? Why? (three points).Problem 2: What is activity-based;management and how can it be used to improve the profitability of a;company? (12 points)

 

Paper#39142 | Written in 18-Jul-2015

Price : $25
SiteLock