Currently in-sync fixtures uses a traditional costing

Assignment Help Accounting Basics

Reference no: EM13610743

The average cost data are for In-Sync Fixtures Company's (a retailer) only two product lines, Marblette and Italian Marble.
___________________________Marblette___Italian Marble
Purchase volume_____________20,000_____1,000
Purchase cost per unit_________$50________$50
Shipments received___________12_________12
Hours used per shipment*_______5__________3
*These data were accumulated after a careful activity analysis.

Currently, In-Sync Fixtures uses a traditional costing system with Indirect costs allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refining the allocation of their receiving costs of $40,000. They realize that the Italian Marble is heavier and requires more care than the Marblette but that the Marblette comes in larger volume.

Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures?
a) The use of this refined activity-based costing system will increase the accuracy of the resulting product costs because a more appropriate cost driver will be used as the allocation base.
b) The traditional allocation method currently being used is causing product-cost cross-subsidization with the product line Marblette being undercosted.
c)The cost allocated to the Italian Marble product line under the current traditional system is more than the activity-based costing allocated cost.
d) The use of this refined activity-based costing system will increase the accuracy of the resulting product costs because it probably will cost less to trace the costs to the product lines.

Production-cost cross-subsidization results from
a) allocating indirect costs to multiple products
b) assigning traced costs to each product
c) assigning costs to different products using varied costing systems within the same organization
d) assigning broadly averaged costs across multiple products without recognizing amounts of resources used by which products

Reference no: EM13610743

Questions Cloud

After closing the accounts on july 1 prior to liquidating : after closing the accounts on july 1 prior to liquidating the partnership the capital account balances of jessup king

Your father runs a small auto body shop he has decided to : your father runs a small auto body shop. he has decided to computerize his records and has asked you to explain the

A length of aluminum wire has a resistance of 200 at : a length of aluminum wire has a resistance of 20.0 ? at 14.0degc. when the wire is warmed in an oven and reaches

An inventor claims to have developed a refrigerator that : an inventor claims to have developed a refrigerator that requires a net power input of 0.7 hp to remove 12000 btuh of

Currently in-sync fixtures uses a traditional costing : the average cost data are for in-sync fixtures companys a retailer only two product lines marblette and italian

According to a website about salaries the national average : according to a website about salaries the national average salary as of october 2003 for a human resources clerk was

Henry mintzberg 1973 depicts these dimensions in ten roles : henry mintzberg 1973 depicts these dimensions in ten roles common to the work of all managers. what are these ten roles

Two trains face each other on adjacent tracks they are : two trains face each other on adjacent tracks. they are initially at rest and their front ends are 36 m apart. the

The following labor standards have been established for a : the following labor standards have been established for a particular product standard labor hours per unit of output

User Account

All Pages