Sue the corporate controller has thus far been impressed

Reference no: EM13599339

Based on the information below please help me answer the following questions:

1. Provide at least 3 possible non-value added activities that the Charlotte facility may be experiencing?
2. Using the old plant-wide rate calculate gross profit.
3. Using the new cost pools and cost drivers (departmental rate) calculate gross profit.

Sue, the corporate controller, has, thus, far been impressed with your performance at the Charlotte plant. She thinks it is time for the Company to move forward with a more precise costing system. She meets with you to discuss if you are able to implement Activity Based Costing at Charlotte. Being on the fast-track, you are eager to demonstrate that you should be the successor to Sue and agreed to pilot ABC at Charlotte. You have gathered the following interim data for envelopes and cups.

Total production overhead $5,017,500
Envelopes Cups
Direct costs $8,250,000 $8,750,000
Units produced 1,500,000 350,000
Machine hours 200,000 50,000
Direct labor hours 34,500 153,625
Number of quality inspections 1,000 6,500
Revenue generated by the two products $15,000,000 $16,800,000

You have determined, using ABC, that overhead can be assigned to separate cost pools specifically:

Pool 1 = $1,260,000 using machine hours as the cost driver
Pool 2 = $2,257,500 using direct labor hours as the cost driver
Pool 3 = $1,500,000 using the number of quality inspections as the cost driver

Historically, Charlotte has used a single plant-wide rate, machine hours for the allocation of overhead.

Reference no: EM13599339

Questions Cloud

Emerson ventures is considering purchasing a new line of : emerson ventures is considering purchasing a new line of hang gliders. the company estimates that variable costs will

The preferred stock was issued for land having a fair value : jude corporation has been authorized to issue 20000 shares of 100 par value 10 noncumulative preferred stock and

Austin company uses a job order cost accounting system the : austin company uses a job order cost accounting system. the companys executives estimated that direct labor would be

Construction company headquarted in terre haute indiana : construction company headquarted in terre haute indiana built a rest easy motel 35 miles east of terre haute. the

Sue the corporate controller has thus far been impressed : based on the information below please help me answer the following questions 1. provide at least 3 possible non-value

Roverplus a pet product superstore is considering pricing a : roverplus a pet product superstore is considering pricing a new roverplus labeled dog food. the company will buy the

A companys beginning work in process inventory consisted of : a companys beginning work in process inventory consisted of 20000 units that were 15 complete with respect to direct

A company uses the weighted average method for inventory : a company uses the weighted average method for inventory costing. during a period department a finished and transferred

Alton company has an overhead application rate of 160 and : alton company has an overhead application rate of 160 and allocates overhead based on direct materials. during the

User Account

All Pages