Description
Complete
Exercise 8-27 and Problem 17-26 in the textbook.
Exercise
8-27 should be prepared in a Word document with a response of a minimum of 250
words.
Problem
17-26 should be completed using Excel with supporting caluclations shown.
Please note, you must show your work in Excel, which includes providing the
formulas in the cells, not just the summary value. You may not earn full points
if you do not show your work in detail.
Save
your assignment as Lastname_FirstnameACC650_T7.docx.
APA
style is not required, but solid academic writing is expected.
Also see attached.
Exercise 8–27
Absorption and Variable Costing; Use of Internet (LO 8-1, 8-6)
Visit the website for one of the following companies, or a different company of your choosing.
Coca-Cola www.coca-cola.com
Bridgestone www.bridgestone.com
Motorola www.motorola.com
Casio www.casio.com
Toyota www.toyota.com
Xerox www.xerox.com
Required: Read about the company’s products and operations. Discuss the pros and cons of absorption
and variable costing as the basis for product costing if the firm uses cost-based pricing.
Problem 17–26
Service Department Cost Allocation (LO 17-1)
1. Overhead rate per hour, etching: $10.602 (rounded)
2. Maintenance department costs allocated to finishing: $87,111
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours
for its two production departments, Etching and Finishing. The Etching Department employs
20 people and the Finishing Department employs 80 people. Each person in these two departments
works 2,000 hours per year. The production-related overhead costs for the Etching Department are
budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service
departments, Maintenance and Computing, directly support the two production departments. These
service departments have budgeted costs of $48,000 and $250,000, respectively. The production
departments’ overhead rates cannot be determined until the service departments’ costs are allocated.
The following schedule reflects the use of the Maintenance Department’s and Computing
Department’s output by the various departments.
Using Department
Service Department Maintenance Computing Etching Finishing
Maintenance (maintenance hours) …………………………………………… 0 1,000 1,000 8,000
Computing (minutes) ………………………………………………………………. 240,000 0 840,000 120,000
Required:
1. Use the direct method to allocate service department costs. Calculate the overhead rates per directlabor
hour for the Etching Department and the Finishing Department.
2. Use the step-down method to allocate service department costs. Allocate the Computing Department’s
costs first. Calculate the overhead rates per direct-labor hour for the Etching Department
and the Finishing Department.
(CMA, adapted)
Purchase answer to see full
attachment
Absorption and Variable Costing; Use of Internet (LO 8-1, 8-6)
Visit the website for one of the following companies, or a different company of your choosing.
Coca-Cola www.coca-cola.com
Bridgestone www.bridgestone.com
Motorola www.motorola.com
Casio www.casio.com
Toyota www.toyota.com
Xerox www.xerox.com
Required: Read about the company’s products and operations. Discuss the pros and cons of absorption
and variable costing as the basis for product costing if the firm uses cost-based pricing.
Problem 17–26
Service Department Cost Allocation (LO 17-1)
1. Overhead rate per hour, etching: $10.602 (rounded)
2. Maintenance department costs allocated to finishing: $87,111
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours
for its two production departments, Etching and Finishing. The Etching Department employs
20 people and the Finishing Department employs 80 people. Each person in these two departments
works 2,000 hours per year. The production-related overhead costs for the Etching Department are
budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service
departments, Maintenance and Computing, directly support the two production departments. These
service departments have budgeted costs of $48,000 and $250,000, respectively. The production
departments’ overhead rates cannot be determined until the service departments’ costs are allocated.
The following schedule reflects the use of the Maintenance Department’s and Computing
Department’s output by the various departments.
Using Department
Service Department Maintenance Computing Etching Finishing
Maintenance (maintenance hours) …………………………………………… 0 1,000 1,000 8,000
Computing (minutes) ………………………………………………………………. 240,000 0 840,000 120,000
Required:
1. Use the direct method to allocate service department costs. Calculate the overhead rates per directlabor
hour for the Etching Department and the Finishing Department.
2. Use the step-down method to allocate service department costs. Allocate the Computing Department’s
costs first. Calculate the overhead rates per direct-labor hour for the Etching Department
and the Finishing Department.
(CMA, adapted)
Purchase answer to see full
attachment
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