MANAGERIAL ACCOUNTING Q1 The Klamath Corp produces two produ

MANAGERIAL ACCOUNTING

Q1:

The Klamath Corp. produces two products, saws and drills. Three activities are used in their manufacture. These activities and their associated costs and bases are as follows:

Activity

Budgeted Costs

Activity Base

$200,000

Machine hours

$400,000

Labor hours

$30,000

Number of setups

Activity Base

Saws

Drills

Total

4,000

6,000

10,000

7,000

13,000

20,000

       3

       12

       15

    500

    600

a. Determine the activity rate for each activity.

b. Determine the overhead cost per unit for each product. Round your answers to two decimal places, if necessary.

$ per unit

Q2:

Kilbuck Manufacturing operates in a lean manufacturing environment. Kilbuck\'s actual conversion costs for the month of May follow:

The journal entry to record May\'s conversion costs will include:

a debit to Raw Materials Inventory

a credit to Work in Process Inventory

a credit to Raw and In Process Inventory

a debit to Raw and In Process Inventory

Q3:

From the above schedule of activity costs, determine the non-value-added costs.

$116,100

$58,200

$234,400

$50,200

Q4:

From the above schedule of activity costs, determine the external failure costs.

$61,700

$89,500

$21,840

$27,300

Q5:

Christmas Express makes wreaths in batch sizes of 15. The cutting & assembly process takes 6 minutes per wreath and the decorating process time is 11 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting & assembly process to the decorating process.

Compute the value-added, non-value-added, and the total lead time of the wreath process.

Compute the value-added ratio. Round to one decimal place.
%

Activity	Budgeted Costs	Activity Base
Stamping	$200,000	Machine hours
Assembly	$400,000	Labor hours
Setup	$30,000	Number of setups

Solution

1a)

b)

2)correct option is \"D\"

Debit to raw and in process inventory   [work in process will debited and Factorylabor and overhead account will be credited]

3)correct option is \"B\" - 58200

non value added activity = 19600+25100+5500+8000=58200

4)correct option is \"A\" -61700

external failure cost =processing returned product + scrap processing +rework +warranty work

    =17500+26000+8400+9800

       = 61700

stamping	200000/10000=$ 20 per MH
Assembly	400000/20000= $ 20 per DLH
set up	30000/15=$ 2000 per set up