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150) The new manager at Sailboat Manufacturing oversees the manufacturing

Question : 150) The new manager at Sailboat Manufacturing oversees the manufacturing : 1876957

150) The new manager at Sailboat Manufacturing oversees the manufacturing operations to ensure theeffective manufacturing process of sails to accommodate the special-orders of sails they receive for sailboats. The manager compiled a report that contained the following data:

Compute the activity cost allocation rate for each of Sailboat Manufacturing's production activities listed in the report. What should the new manager understand about the cost allocation rates at Sailboat Manufacturing? How will the new manager use the activity cost allocation rates during the coming year at Sailboat Manufacturing?

151) The managerial accountant at the Umbrella Manufacturing Plant allocates manufacturing overhead from each activity to the individual jobs that use the activities for Product A.

Product A:

ActivityActivity Cost Allocation RateActual Use of Activity Allocation Base              MOH Allocated to Product A

Machine Setup$12.00 per setup3 setups?

Raw Materials Handling$ 0.75 per unit25 units?

Fabricating$18.00 per machine hour2 machine hours?

Parts Assembly$2.00 per DL hour10 DL hours?

Inspecting$6.00 per inspection4 inspections?

Packaging$0.35 per cubic foot65 cubic foot?

Total?

Two Products

 

ActivityActivity Cost Allocation RateActual Use of Activity Allocation Base              MOH Allocated to Product A

Machine Setup?5 setups?

Raw Materials Handling?28 units?

Fabricating?5 machine hours?

Parts Assembly?6 DL hours?

Inspecting?2 inspections?

Packaging?70 cubic foot?

Total?

Compute the total MOH allotted to Product A. Next, use the same Activity Cost Allocation Rates to compute the Activity Cost Allocation Rates and the MOH allocated to produce two products. What is the total MOH allocated to manufacture two products?

152) ABC tends to increase the unit cost of low-volume products and decrease the unit cost of high-volume products.

153) Traditional cost systems with a single-allocation base tend to overcost high-volume products and undercost low-volume products as compared to activity-based costing systems.

154) There will be little benefit to using an activity-based costing system when products are vastly different from each other and consume different amounts of resources.

155) A company is a company that has reengineered its production process and the next step is to review and potentially revise its activity-based costing system.

156) Activity-based management refers to using activity-based cost information to make decisions that may increase profits while satisfying customers' needs.

157) Managers often reap benefits by using ABC data in ABM to pinpoint opportunities to cut costs.

158) ABC can be used in routine planning and control decisions as well as pricing, product mix and cost cutting decisions.

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