INTRODUCTION AND RATIONALE
The purpose of this assignment is to help students further develop a number of the skills and knowledge required and valued by the accountancy profession. The task that students are required to undertake is similar to the tasks required of a professional accountant working within the management accounting field.
Marks will be awarded based on the accuracy and completeness of answers for each section. The assignment must be attempted and completed on an individual basis and submitted by the due date.
PRESENTATION FORMAT
Students should submit a typed response. A faculty specific Assignment Cover Sheet should be completed and attached to each submission. Copies of the Assignment Cover Sheet may be found on Blackboard.
Numerical questions
In the awarding of marks for numerical questions, consideration will be given to:
- correctness of answers;
- appropriate formatting and headings;
- relevant workings;
- approach taken to solve the problem; and
- completeness of answers.
The accountant for Scenic Photographic Supply Company has established the following overhead cost pools and activity drivers.
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Overhead Cost Pool
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Budgeted Overhead Cost
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Activity Driver
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Machine set-ups
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$100,000
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Number of setups
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Material handling
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$50,000
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Weight of raw material
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Hazardous waste control
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$25,000
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Weight of hazardous chemicals used
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Quality control inspection
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$37,500
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Number of inspections
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Other overhead costs
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$100,000
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Machine hours
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Total
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$312,500
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Overhead Cost Pool
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Budgeted Level for Activity Driver
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Overhead Rate
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Machine set-ups
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100
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$1,000 per setup
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Material handling
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50,000 kilos
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$1 per kilo
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Hazardous waste control
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10,000 kilos
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$2.50 per kilo
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Quality control inspection
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1,000
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$37.50 per inspection
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Other overhead costs
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20,000
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$5 per machine hour
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An order for 1,000 boxes of film development chemicals has the following production requirements:
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Machine set-ups
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4 Set-ups
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Raw material
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l0,000 kilos
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Hazardous materials
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2,000 kilos
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Inspections
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10 inspections
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Machine hours
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500 machine hours
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Required
A. Calculate the total overhead that should be assigned to the development chemical order.
B. What is the overhead cost per box of chemicals?
C. Suppose Scenic Photographic Supply Company was to use a single, predetermined overhead rate based on machine hours. Calculate the rate per hour.
D. Using the single plantwide overhead rate based on machine hours, what will be the total overhead assigned and the overhead cost per box of chemicals