Chapter 6 review accounting answers

State Finished

Completed on Wednesday, November 1, 2017, 6:13 PM

Time taken 20 hours 23 mins

Grade 10.00 out of 15.00 (67%)

QUESTION 1 Correct 2.00 points out of 2.00

Two-Stage ABC for Manufacturing Columbus Foundry, a large manufacturer of heavy equipment components, has determined the following activity cost pools and cost driver levels for the year:

Activity cost pool Activity cost Activity cost driver

Machine setup $600,000 12,000 setup hours

Material handling 180,000 2,000 tons of materials

Machine operation 500,000 10,000 machine hours

The following data are for the production of single batches of two products, C23 Cams and U2 Shafts:

C23 Cams U2 Shafts

Units produced 500 200

Machine hours 5 5

Direct labor hours 400 500

Direct labor cost $5,000 $10,000

Direct materials cost $30,000 $20,000

Tons of materials 12.5 8

Setup hours 4 5

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11/1/17, 6'14 PMHW Assignment - Chapter 6

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Setup hours 4 5

Determine the unit costs of C23 Cams and U2 Shafts using ABC.

C23 Cams $ 73.15 !

U2 Shafts $ 156.1 !

QUESTION 2 Correct 3.00 points out of 3.00

Customer Profitability Analysis Roland, Inc. provides residential painting services for three home building companies, Alpha, Beta, and Gamma, and it uses a job costing system for determining the costs for completing each job. The job cost system does not capture any cost incurred by Roland for return touchups and refinishes after the homeowner occupies the home. Roland paints each house on a square footage contract price, which includes painting as well as all refinishes and touchups required after the homes are occupied. Each year, Roland generates about one-third of its total revenues and gross profits from each of the three builders. Roland has observed that the builders, however, require substantially different levels of support following the completion of jobs. The following data have been gathered:

Support Activity Driver Costs per Driver Unit

Major refinishes Hours on job $40

Touchups Number of visits $150

Communication Number of calls $20

Builder Major Refinishes Touchups Communication

Alpha 80 150 360

Beta 35 110 205

Gamma 42 115 190

Assuming that each of the three customers produces gross profits of $100,000, calculate the profitability from each builder after taking into account the support activity required for each builder. Alpha

$ 67,100 !

11/1/17, 6'14 PMHW Assignment - Chapter 6

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$

Beta

$ 78,000 !

Gamma

$ 77,270 !

QUESTION 3 Partially correct 5.00 points out of 10.00

Activities and Cost Drivers For each of the following activities, select the most appropriate cost driver.

Each cost driver may be used only once.

Activity Cost Driver

1. Pay vendors h. Number of vendors

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2. Evaluate vendors f. Number of units of raw materials received

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3. Inspect raw materials a. Number of different kinds of raw materials

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4. Plan for purchases of raw materials j. Number of customer orders station to the next

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5. Packaging i. Number of checks issued

"

6. Supervision d. Number of employees

!

7. Employee training b. Number of classes offered

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8. Clean tables c. Number of tables

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9. Machine maintenance e. Number of operating hours

!

11/1/17, 6'14 PMHW Assignment - Chapter 6

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10. Move in-process product from one work

g. Number of moves

!

1. i 6. d

2. h 7. b*

3. f 8. c

4. a 9. e

5. j 10. g

* (Note: (d) cannot be used because it is the most logical answer to item 6, and each answer can be used only once.)