3 Managerial Accounting homework problems

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Please see attached homework problems. Problem #3 has 3 separate requirements

Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below:

Activity Cost Pool

Activity Measure

Caring for lawn

Square feet of lawn

Caring for garden beds–low maintenance

Square feet of low maintenance beds

Caring for garden beds–high maintenance

Square feet of high maintenance beds

Travel to jobs

Miles

Customer billing and service

Number of customers


The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows:

Activity Cost Pool

Estimated
Overhead
Cost

Expected Activity

Caring for lawn

$

76,200

175,000

square feet of lawn

Caring for garden beds–low maintenance

$

28,800

30,000

square feet of low maintenance beds

Caring for garden beds–high maintenance

$

66,480

24,000

square feet of high maintenance beds

Travel to jobs

$

3,800

21,000

miles

Customer billing and service

$

7,900

40

customers


Required:

Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.)

2, Durban Metal Products, Ltd., of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below:

Activity Cost Pool

Activity Measure

Activity Rate

Order size

Number of direct labor-hours

$

17.90

per direct labor-hour

Customer orders

Number of customer orders

$

368.00

per customer order

Product testing

Number of testing hours

$

81.00

per testing hour

Selling

Number of sales calls

$

1,495.00

per sales call


The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer axles. The order required 150 direct labor-hours, 20 hours of product testing, and 5 sales calls.

Required:

What is the total overhead cost assigned to the order for heavy-duty trailer axles?

3, Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:

Xtreme

Pathfinder

Selling price per unit

$

115.00

$

85.00

Direct materials per unit

$

63.90

$

51.00

Direct labor per unit

$

12.00

$

10.00

Direct labor-hours per unit

1.2

DLHs

1.0

DLHs

Estimated annual production and sales

28,000

units

75,000

units


The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Estimated total manufacturing overhead

$

2,063,400

Estimated total direct labor-hours

108,600

DLHs


Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):

Estimated
Overhead Cost

Expected Activity

Activities and Activity Measures

Xtreme

Pathfinder

Total

Supporting direct labor (direct labor-hours)

$

673,320

33,600

75,000

108,600

Batch setups (setups)

520,000

280

240

520

Product sustaining (number of products)

790,000

1

1

2

Other

80,080

NA

NA

NA

Total manufacturing overhead cost

$

2,063,400


Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Requirement 1

Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)

Xtreme

Pathfinder

Total

Product margin

Requirement 2

ompute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.)

Xtreme

Pathfinder

Total

Product margin

  • Required 1

Requirement 3

Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places.)


Xtreme

Pathfinder

Total

% of

% of

Amount

Total Amount

Amount

Total Amount

Amount

Traditional Cost System

%

%

%

%

%

%

Total cost assigned to products

$0

$0

$0

Xtreme

Pathfinder

Total

% of

% of

Amount

Total Amount

Amount

Total Amount

Amount

Activity-Based Costing System

Direct costs:

%

%

%

%

Indirect costs:

%

%

%

%

%

%

Total cost assigned to products

$0

$0

$0

Costs not assigned to products:

Total cost

$0

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