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1. The following is a list of activities that occur for a company that sells many different types of products. Please classify each as either unit-level (U), batch-level (B), product-level (P), or organization-sustaining activity (O):packing labor wagesmaterials-handling labor wagespart administrators’ salaries plant management salariesproduction scheduling staff salariescost of servicing production equipment, based on hours usedproperty taxes for a plant siteproduction expediters’ salariesinsurance for plant siteplant securityproduction workers’ trainingcost of electricity to run production equipment
2. Shambu Shoes is in the business of manufacturing basketball shoes. Accordingly the company uses the six activity cost pools listed below:Activity Cost Pool Activity Measure Maintenance Machine HoursSetups Setup HoursCutting Supervision Setup HoursCutting Depreciation Machine HoursAssembly supervision Direct Labor hoursAssembly Depreciation Machine HoursThe company has already carried out its first stage allocations of costs. The company’s annual costs and activities are summarized as follows:
Activity Cost Pool Estimated Overhead Cost Expected Activity
Maintenance $150,000 50,000 Machine hoursSetups $450,000 300 Setup hoursCutting Supervision $270,000 300 setup hoursCutting Depreciation $160,000 80,000 Machine Hours
Assembly Supervision $160,000 32,000 Direct Labor hrs
Assembly Depreciation $20,000 80,000 Machine Hours
Compute the activity rate for each of the activity cost pools: (Show computations)a. Maintenanceb. Setupsc. Cutting supervisiond. Cutting depreciatione. Assembly supervisionf. Assembly depreciation
3. DS Company has identified the following cost pools and activity rates:Activity Cost Pool Activity RateSupporting direct labor $4 per direct labor hourMachine processing $3 per machine hourMachine setups $30 per setupProduction orders $11 per orderShipments $98 per shipmentProduct sustaining $750 per product
Activity data have been supplied for the following products: Total Expected Activity D130 S150Direct labor hours 2,500 300Machine hours 4,300 250Machine Setups 7 2Production orders 3 2Shipments 9 4Products sustaining 2 1Determine the total overhead cost that would be assigned to each of the products listed above in the activity based costing system: (show computations and details)
a. D130b. S150
4. Statues Inc. has the following sales budget for the second of the current year:
April $250,000
May $340,000
June $590,000
Total Budgeted sales $1,180,000From past experience the company has learned that 10% of a month’s sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 30% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $150,000 and March Sales totaled $220,000.For each of the following months, calculate the amount of projected cash collections: Show solutions and related details.A. AprilB. MayC. June
5. Valentino Company had the following budgeted sales over the last 4 months of the year:
Sales in UnitsOctober 10,000November 25,000December 35,000January 46,000The company is now in the process of preparing a production budget for the fourth quarter. Past experience has shown that end of the month inventories of finished good must equal 20% of the next month’s sales. The inventory at the end of September is 2,000 units For each of the following months calculate the number of units that need to be produced: (show computations and related details)
a. Octoberb. Novemberc. December
