EXHIBIT 1 | | | | | | Total | Valves | Pumps | Flow Controllers | Manufacturing Costs | | | | | Material Cost per Unit | | $ 16 | $ 20 | $ 22 | Units/Month | | 7,500 | 12,500 | 4,000 | Material Cost per Month | | 120,000 | 250,000 | 88,000 | | | | | | Labor Unit Cost | | | | | Production Runs per Month | | 1 | 5 | 10 | Set-up Labor Hrs/Prod. Runs | | 8 | 8 | 12 | Run Labor Hrs/Unit | | 0.25 | 0.5
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refining a costing system, a company should classify as many costs as possible as indirect costs. 3. Indirect labor and distribution costs would most likely be in the same activity-cost pool. 4. Activity-based costing helps identify various activities that explain why costs are incurred. 5. Traditional systems are likely to undercost complex products with lower production volume. 6. For activity-based cost systems, activity costs are assigned to products in the proportion of the demand they
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released for sale. Using the single-cavity mould, monthly production capacity is about 40,000 units. Ken wishes to maintain a minimum of 10,000 units inventory; however, if inventory exceeds 10,000 units, warehouse space would have to be rented at a cost of $200 per month. The warehouse space has a capacity of 35,000 units and can be leased on a monthly basis; no annual lease is required. Lease payments are due the month following the actual lease. Perfect Plastics requires production runs of at
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first stage allocation of overhead costs to the activity cost pools. 2. Compute activity rates for the activity cost pools. 3. Construct a table showing the overhead costs of units and four orders. Ferris Corporation makes a single product - a fire resistant commercial filing cabinet - that it sells to office furniture distributors. The company has a simple ABC system that it uses for internal decision making. The company has two overhead departments whose costs are listed below: |Manufacturing
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issue at hand involves the relevant cost of a set of replacement parts. The parts, however, range from those that are totally manufactured and ready for sale, to those that have not yet been manufactured but for which raw material is on hand, to those that have not yet been manufactured and for which no inventory of raw material exists. The case solution turns in large part on the use of contribution analysis. However, the concepts of sunk costs, opportunity costs, and product substitution are prominent
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Cost Allocation Methods Don Lowery University of Phoenix The focus of this paper is to identify the basic aspects of the direct and step-down methods of cost allocation. Included will be a comparison of the two methods and their strengths and weaknesses. Direct Method Horngren defines the direct method of cost allocation as “a method for allocating service department costs that ignores other service departments when any given service department’s costs are allocated to the operating departments”
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Direct materials | $24,800 | $26,700 | Work in process | 57,600 | 55,200 | Finished goods | 83,300 | 87,400 | | | | Additional budget information follows: Total manufacturing costs | $354,500 | Cost of goods manufactured | 356,900 | | | Calculate the budgeted cost of goods sold. Answer | | | | | | | $352,800 | | | $350,400 | | | $361,000 | | | $359,300 | | | | | 10 points ------------------------------------------------- Question
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allocation of overhead by using Traditional Cost Accounting (TCA) and Activity Based Costing (ABC) in a manufacturing company named Wilkerson. Through the case study, I have learnt the importance of Cost Accounting System, the principles of TCA and ABC, the advantages and disadvantage of ABC, the practical use of ABC and cost reduction using ABC. 1. Importance of Cost Accounting System. Through the case study, I learnt that a proper Cost Accounting System is very important in a company. Without
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the recovery of overhead within a full cost pricing policy. The discussion centred around the traditional method currently in use, compared and contrasted with ABC, Activity Based Costing a technique which re-examines the problem that has faced accountants for decades – that of allocation and absorption of overhead. Traditional pricing method has been based upon absorption costing and the treatment of overhead usually followed a set procedure. ( Cost centres are identified and established
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Problem 9-40 (60 minutes) 1. Sales budget for 20x0: | | | | | Units | Price | Total | Light coils | 60,000 | $120 | $ 7,200,000 | Heavy coils | 40,000 | 170 | 6,800,000 | Projected sales | | | $14,000,000 | 2. | Production budget (in units) for 20x0: | | | Light Coils | Heavy Coils | Projected sales | 60,000
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