Project #162050 - Job Costing/Activity Based Costing/Process Costing

Mathematics Tutors

Subject Mathematics
Due By (Pacific Time) 01/05/2017 05:00 pm

 

Should be 3-5 sentences at minimum.

 

1. (Job Costing) Question 7-8

 

 

 

Why do most companies use normal or standard costing? After all, actual costing gives the actual cost, so the firm could just wait until it knows what the cost will be.

 

 

 

2. (Process Costing) Question 8-4

 

 

 

What is the distinction between equivalent units under the FIFO method and equivalent units under the weighted-average method?

 

 

 

3. (Activity Based Costing) Question 9-19

 

 

 

Activity-based costing is just another inventory valuation method. It isn’t relevant for making operating decisions.” Do you agree with this statement? Explain.

 

 

 

4. (Activity Based Costing) Question 9-21

 

 

 

Plantwide versus Department Allocation

 

 

 

 

Baseball Bats

Tennis Rackets

Revenue

$1,350,000

$900,000

Direct Labor

$250,000

$125,000

Direct Materials

$550,000

$275,000

 

Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Department B produces the baseball bats, and Department T produces the tennis rackets. Munoz currently uses plantwide allocation to allocate its overhead to all products. Direct labor cost is the allocation base. The rate used is 200 percent of direct labor cost. Last year, revenue, materials, and direct labor were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A. Compute the profit for each product using plantwide allocation.

 

 

 

B. Maria, the manager of Department T, was convinced that tennis rackets were really more profitable than baseball bats. She asked her colleague in accounting to break down the overhead costs for the two departments. She discovered that had department rates been used, Department B would have had a rate of 150 percent of direct labor cost and Department T would have had a rate of 300 percent of direct labor cost. Recompute the profits for each product using each department’s allocation rate (based on direct labor cost).

 

 

 

C. Why are the results different in requirements (a) and (b)?

 

 

 

 

 

REFERENCE:

 

Lanen, W.N., Anderson, S.W., & Maher, M.W. (2011). Fundamentals of Cost Accounting (3rd ed.). New York: McGraw-Hill Irwin.

 

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