Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes.Activity (Cost) Cost Driver Delux Moderate Economy
Machine maintenance ($330,000) machine hours 250 750 1,000
Setups ($630,000) setups 35 20 15
Packing ($166,000) cartons 10 30 60
Photo development ($574,000) pictures 4,400 2,400 1,400
Deluxe textbooks are made with the finest quality paper, six-color printing, and many photographs. Moderate texts are made with three colors and a few photographs spread throughout each chapter. Economy books are printed in black and white and include pictures only in chapter openings.

Required:

Sheridan currently allocates all overhead costs based on machine hours. The company produced the following number of books during the prior year:

Deluxe Moderate Economy
50,000 150,000 200,000
Determine the overhead cost per book for each book type.

Answers

Answer 1
Answer:

Answer:

Deluxe= $4.25 per book

Moderate= $4.25 per book

Economy= $4.25 per book

Explanation:

Giving the following information:

Activity (Cost) Cost Driver Delux Moderate Economy

Machine maintenance ($330,000) machine hours 250 750 1,000

Setups ($630,000)

Packing ($166,000)

Photo development ($574,000)

First, we need to calculate the total overhead cost:

Total overhead= 330,000 + 630,000 + 166,000 + 574,000= 1,700,000

Now, we can calculate the estimated manufacturing overhead rate to allocate overhead to each book type.

The allocation base is machine-hours.

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 1,700,000/ 2,000= $850 per machine hour.

Now, we can allocate overhead to each book:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Deluxe= $850*250hours= $212,500

Moderate= $850*750hours= $637,500

Economy= $850*1,000= $850,000

Based on the number of units, we can calculate the unitary overhead:

Deluxe= $212,500/50,000= $4.25 per book

Moderate= $637,500/150,000= $4.25 per book

Economy= $850,000/200,000= $4.25 per book

Answer 2
Answer:

Final answer:

To determine the overhead cost per book for each type, we first establish the cost per unit/activity (machine hour, setup, carton, picture). Then, we multiply each activity cost by the respective number of activities for each book type. Finally, we divide the total overhead cost by the number of books produced. This method is known as Activity-Based Costing.

Explanation:

To determine the overhead cost per book for each book type, Activity-Based Costing (ABC) is used. This cost allocation method assigns overhead costs to each activity (or task) involved in the production process and then allocates these costs to the various products based on the volume of each activity they require.

Step 1: Calculate the cost per driver for each activity.

  • Machine maintenance cost per machine hour: $330,000 ÷ 2,000 hours = $165/hour
  • Setups cost per setup: $630,000 ÷ 70 setups = $9,000/setup
  • Packing cost per carton: $166,000 ÷ 100 cartons = $1,660/carton
  • Photo development cost per picture: $574,000 ÷ 8,200 pictures = $70/picture

Step 2: Calculate the total overhead cost for each book type by multiplying the cost per driver by the number of drivers for each activity.

Step 3: To find the overhead cost per book, divide the total overhead cost by the number of books produced.

From this exercise, it is clear that different products consume overhead resources differently and thus can have different per-unit overhead costs when you move from the traditional cost system to the Activity Based Costing method.

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Suppose a hypothetical economy is currently in a situation of deficient aggregate demand of $64 billion. Four economists agree that expansionary fiscal policy can increase total spending and move the economy out of recession, but they are debating which type of expansionary policy should be used. Economist A believes that the government spending multiplier is 8 and the tax multiplier is 4. Economist B believes that the government spending multiplier is 4 and the tax multiplier is 2. Economist B believes that the government spending multiplier is 4 and the tax multiplier is 8.Compute the amount the government would have to increase spending to close the output gap according to each economist's belief. Then, for each scenario, compute the size of the tax cut that would achieve this same effect.

Plemmon Company adds materials at the beginning of the process in the forming department, which is the first of two stages of its production cycle. Information concerning the materials used in the forming department in April follows: Units MaterialsCosts Work in process at April 1 15,000 $ 8,000 Units started during April 60,000 $38,500 Units completed and transferred to next department during April 65,000 Using the average cost method, what is the materials cost of the work in process at April 30?

Answers

Answer:

$6,200

Explanation:

Beginning Work in progress     $15,000       $8,000

Units started                               $60,000      $38,500

Total process                              $75,000      $46,500

Less: Units transferred to tax    $65,000

Ending work in progress            $10,000

Average cost method material cost of work in progress = Material cost ÷ Total units

$46,500 ÷ $75,000

= $0.62

Material cost of work in progress = $0.62 × $10,000

= $6,200

Final answer:

In April, Plemmon Company started with $8000 worth of materials and used $38500 over the month. 65,000 units were completed, leaving 10,000 units still in process. The materials cost of these remaining units, calculated using the average cost method, is $6,200.

Explanation:

To find the material cost of work in process at April 30 using the average cost method, we first need to calculate the total cost of material used throughout April, which includes both the cost of materials from initial work in process and the materials started during the month. That gives us the sum of $8,000 and $38,500, amounting to $46,500 in total materials cost. Since 65,000 units were completed and transferred out during April, this means 10,000 units (75,000 units at the start and started during April - 65,000 units completed) remain in work in process at the end of April. Average cost per unit is calculated as total cost divided by total units, giving us $46,500 divided by 75,000 units, which equals $0.62 per unit. The material cost of work in process at April 30 is thus 10,000 units times $0.62, giving a result of $6,200.

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The research and development division of Anchor Inc., a manufacturing firm, has a sizeable number of engineers for its employees. The buying decisions related to the equipment to be used in the research and development of new technologies is primarily made by the engineers. Based on these traits, which of the following organization-specific factors is most relevant in the division's purchasing process? a. Monopolization
b. Segmentation
c. Orientation
d. Centralization

Answers

Answer:

The correct answer is letter "C": Orientation.

Explanation:

The primary organization-specific factors are orientation, size of the organization, and degree of centralization. Orientation refers to the function of a company that controls the decisions in regards to purchases. The size of the organization implies decision making will be more centralized in larger firms while more decentralized in smaller firms. Finally, the degree of centralization states that even in highly autonomous corporations, some purchases might be subject to the approval of a manager who confirms the need for the assets being acquired.

Because in Anchor Inc. the purchase decisions are made by engineers the orientation organization-specific factor is more relevant in that company.

On July 1, Shady Creek Resort borrowed $330,000 cash by signing a 10-year, 12% installment note requiring equal payments each June 30 of $58,405. What amount of interest expense will be included in the first annual payment

Answers

Answer:

Borrowed Amount = $330,000

Interest Rate = 12%

Interest Expense = Borrowed amount * Interest Rate

Interest Expense = $330,000 * 12%

Interest Expense = $39,600

The balance in accounts receivable at the beginning of 2021 was $690. During 2021, $3,200 of credit sales were recorded. If the ending balance in accounts receivable was $170 and $100 in accounts receivable were written off during the year, the amount of cash collected from customers during 2021 was:

Answers

Answer:

$3,620

Explanation:

Accounts receivable at the beginning + recorded credit sales -accounts receivable written off -ending balance accounts receivable.

Therefore:

$690+$3,200-$100-$170 =$3,620

A profit maximizing competitive firm in a market with NO externalities will produce the quantity of output whereA) price = marginal cost
B) marginal revenue = marginal cost
C) marginal benefit = marginal cost
D) all of these are true

Answers

A profit maximizing competitive firm in a market with NO externalities will produce the quantity of output where

  • price = marginal cost
  • marginal revenue = marginal cost
  • marginal benefit = marginal cost

Option D

Explanation:

All of the options are true.

In a highly competitive market, companies set marginal incomes at marginal cost level (MR= MC) in order to make a profit. MR is the pitch of the profit curve, which represents the (D) and price (P) of the demand curve as well.

It is necessary to have positive, or negative economic benefits in the shorter term. The company profits whenever the price exceeds the total average cost. The company loses on the market if premiums are less than average total costs.

Suppose the price of widgets rises from $5 to $7 and consumption of widgets falls from 25 widgets a month to 15 widgets. Calculate your price elasticity of demand of widgets. What can you say about your price elasticity of demand of widgets? Is it Elastic, Inelastic, or Unitary Elastic? Why? Please show your work.

Answers

Answer:

1

Unitary elastic

Elasticity of demand is unitary elastic because the absolute value of elasticity is equal to 1.

Explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Elasticity of demand = percentage change in quantity demanded / percentage change in price

Percentage change in quantity demanded = (25 - 15) / 25 = 0.4 × 100 = 40%

Percentage change in price = ($5 - $7) / $5 = 0.4 × 100 = 40%

Elasticity of demand = 40% / 40% = 1

If coefficient of elasticity is equal to 1, demand is unit elastic. It means that a change in price has an equal efect on the quantity demanded. Quantity demanded has an equal and proportional change to changes in price.

I hope my answer helps you

Final answer:

The price elasticity of demand is calculated to be 1, indicating unitary elasticity. This means a percentage change in price leads to an equal percentage change in quantity demanded, which implies widgets have a proportional responsiveness to price changes.

Explanation:

The price elasticity of demand for widgets can be calculated using the formula: PED = (% Change in Quantity Demanded) / (% Change in Price)

To determine the percentage change in quantity demanded, subtract the new quantity (15 widgets) from the original quantity (25 widgets), divide by the original quantity, and multiply by 100. The calculation is: [(15 - 25) / 25] * 100 = -40%

The percentage change in price is calculated as: [(7 - 5) / 5] * 100 = 40%

Substituting these values into the formula gives: PED = (-40%) / (40%) = -1. Because we usually report price elasticity of demand as absolute values, we interpret it as 1 in absolute value terms.

Since the price elasticity of demand is 1, it indicates a unitary elasticity. This implies that a 1% change in price induces a proportionate 1% change in quantity demanded. So, as price increased, customers decreased their purchase of widgets proportionately.

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