Assignment Chapter 26

Black and Blue Sports Inc. manufactures two products: snowboards and skis. The factory overhead incurred is as follows:The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows:The activity-base usage quantities and units produced for the two products are shown below.Required:1.  Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $315,000 and $540,000 for the Cutting and Finishing departments, respectively. If required, round your answers to two decimal places.DepartmentProduction Department RateCutting Department$[removed] per direct labor hourFinishing Department$[removed] per direct labor hour2.  Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). If required, round your answers to two decimal places.ProductTotal Factory OverheadFactory Overhead Per UnitSnowboards$[removed]$[removed]Skis$[removed]$[removed]3.  Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments.ActivityActivity RateProduction Control$[removed] per prod. runMaterials Handling$[removed] per moveCutting Department$[removed] per direct labor hourFinishing Department$[removed] per direct labor hour4.  Determine the total and per-unit cost assigned to each product under activity-based costing. If required, round your answers to two decimal places.ProductTotal Activity CostActivity Cost Per UnitSnowboards$[removed]$[removed]Skis$[removed]$[removed]Teldar Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:The activity bases identified for each activity are as follows:The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:Each product requires 0.8 machine hour per unit.Required:If required, round all per unit amounts to the nearest cent.1.  Determine the activity rate for each activity.Production$[removed] per mhSetup$[removed] per setupMoving$[removed] per moveShipping$[removed] per cust. ord.Product Engineering$[removed] per test run2.  Determine the total and per-unit activity cost for all three products. Total Activity CostActivity Cost Per UnitComputer Paper$[removed]$[removed]Newsprint$[removed]$[removed]Specialty Paper$[removed]$[removed] Cold Zone Mechanical Inc. manufactures cooling units for commercial buildings. The price and cost of goods sold for each unit are as follows:In addition, the company incurs selling and administrative expenses of $240,940. The company wishes to assign these costs to its three major customers, Good Knowledge University, Hot Shotz Arena, and Break-a-Leg Hospital. These expenses are related to three major nonmanufacturing activities: customer service, project bidding, and engineering support. The engineering support is in the form of engineering changes that are placed by the customer to change the design of a product. The budgeted activity costs and activity bases associated with these activities are:Activity-base usage and unit volume information for the three customers is as follows:Required:1.   Determine the activity rates for each of the three nonmanufacturing activity pools. Activity Rate Customer Service$[removed]per serv. req.Project Bidding$[removed]per bidEngineering Support$[removed]per design change2.  Determine the activity costs allocated to the three customers, using the activity rates in (1). Activity CostsGood Knowledge University$[removed]Hot Shotz Arena$[removed]Break-a-Leg Hospital$[removed] Hide  3.  Construct customer profitability reports for the three customers, dated for the year ended December 31, 2014, using the activity costs in (2). The reports should disclose the gross profit and income from operations associated with each customer. Enter all amounts as positive numbers, except for a negative income from operations. Cold Zone Mechanical Inc.  Customer Profitability Report  For the Year Ended December 31, 2014    Good Knowledge University   Hot Shotz Arena   Break-a-Leg Hospital  Revenues  $ [removed]  $ [removed]  $ [removed]  Less cost of goods sold   [removed]   [removed]   [removed]  Gross profit  $ [removed]  $ [removed]  $ [removed]  Less selling and administrative activities:        Customer service  $ [removed]  $ [removed]  $ [removed]  Project bidding   [removed]   [removed]   [removed]  Engineering support   [removed]   [removed]   [removed]   $ [removed]  $ [removed]  $ [removed]  Income from operations  $ [removed]  $ [removed]  $ [removed] Pleasant Stay Medical Inc. wishes to determine its product costs. Pleasant Stay offers a variety of medical procedures (operations) that are considered its “products.” The overhead has been separated into three major activities. The annual estimated activity costs and activity bases are provided below.Total “patient days” are determined by multiplying the number of patients by the average length of stay in the hospital. A weighted care unit (wcu) is a measure of nursing effort used to care for patients. There were 192,000 weighted care units estimated for the year. In addition, Pleasant Stay estimated 6,000 patients and 27,000 patient days for the year. (The average patient is expected to have a little more than a four-day stay in the hospital.)During a portion of the year, Pleasant Stay collected patient information for three selected procedures, as shown below.Private insurance reimburses the hospital for these activities at a fixed daily rate of $406 per patient day for all three procedures.Required:1.  Determine the activity rates.Scheduling and admitting$[removed] per patientHousekeeping$[removed] per patient dayNursing$[removed] per wcu2.  Determine the activity cost for each procedure.Procedure A$[removed]Procedure B$[removed]Procedure C$[removed]3.  Determine the excess or deficiency of reimbursements to activity cost.Procedure A$[removed]Procedure B$[removed]Procedure C$[removed]