Solution-Does the traditional approach under or over cost

Does the traditional approach under or over cost

Assignment Help Corporate Finance

Reference no: EM13972759

Academy Enterprises uses a traditional-costing system to estimate quality-control costs for its PDA product line. Costs are estimated at 32% of direct-labor cost, and direct labor totaled $548,000 for the quarter just ended. Management is contemplating a change to activity-based costing, and has established three cost pools: incoming material inspection, in-process inspection, and final product certification. Number of parts, number of units, and number of orders have been selected as the respective cost drivers.
The following data show the application rates that have been calculated by the company along with the quantity of driver units for the PDAs:
Cost Application Rate Driver Quantities
$ 0.50 per part ...... 14 parts
0.10 per unit ...... 26,000 units
110.00 per order ...... 80 orders

Required:

A. Calculate the quarterly quality-control cost that is allocated to the PDA product line under Academy's traditional-costing system.

B. Calculate the quarterly quality-control cost that is allocated to the PDAs if activity-based costing used.

C. Does the traditional approach under- or over cost the product line? By how much?

Reference no: EM13972759

Questions Cloud

Claim of right to the income : Determine whether the taxpayer in each of the following situations has a claim of right to the income received: a. Trigger, Inc., receives a $5,000 stud fee for services rendered by one of its prized horses. Under its standard contract, Trigger ..

Find two forecasts of big data growth : Describe the relationship between enterprise archi-tecture and organizational performance. visit Oracle.com . Describe the types of virtualiza-tion services offered by Oracle. Copyright | Wiley | Information Technology for Managemen

Terms of the income tax concepts : The contract stipulates that if Shannon does not produce an acceptable plan, she must repay any portion of the advance not earned to date. Does Shannon have any income from the receipt of the advance? Explain in terms of the income tax concepts p..

Determine the amount of income : Determine whether the taxpayer in each of the following situations has realized income. Explain why there has or has not been a realization, and determine the amount of income to be reported:

Does the traditional approach under or over cost : Calculate the quarterly quality-control cost that is allocated to the PDA product line under Academy's traditional-costing system.

Find the change in electric potential energy : A uniform electric field with a magnitude of 5550N/C points in the positive x direction. Find the change in electric potential energy when a +16.5-μC charge is moved 5.50cm in the positive x direction

Journalize the entry on august 4 to record the purchase and : On August 4, Rothchild Company purchased on account 12,000 units of raw materials at $14 per unit. On August 24, raw materials were requisitioned for production as follows: 5,000 units for Job 40 at $8 per unit and 6,200 units for Job 42 at $14 per u..

Evaluate the impact that a company''s code of conduct : .Determine both the relationship of risks in the planning of the audit and factors that influence those risks. Speculate on which type of risk creates the most uncertainty for the auditor, and recommend at least two ways to plan the audit to mitig..

Write suitable memo addressing company employees to convey : Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation.

User Account

All Pages

Does the traditional approach under or over cost

Reference no: EM13972759

Reference no: EM13972759

Questions Cloud

Reviews

Write a Review

Corporate Finance Questions & Answers

Impact of the global economic crisis on business environment

Explain the short and the long-run effects on real output

Examine the requirements for measuring assets

Financial analysis report driven by rigorous ratio analysis

Calculate the value of the merged company

Stock market project

Write paper on financial analysis and business analysis

Intermediate finance

Average price-earnings ratio

Determine the financial consequences

Prepare a spread sheet model

Principles and tools for financial decision-making

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT