Csolution Manual Ch4

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Chapter 4

Activity-Based Costing, Lean Production, and the Costs of Quality

Quick Check

Answers:

|QC4-1. d |QC4-3. c |QC4-5. c |QC4-7. c | QC4-9. a |

|QC4-2. d |QC4-4. c |QC4-6. d |QC4-8. d |QC4-10. c |

Short Exercises

(5 min) S 4-1

a. Prevention costs

b. Lean production

c. Activity-based costing

d. Appraisal costs

e. Unit-level costs

f. Value-added activities

g. Internal failure costs

h. Product-level costs

i. Non-value added activities

j. External failure costs

k. Batch-level costs

l. Plantwide overhead rate

m. Cost distortion

n. Facility-level costs

(5 min) S 4-2

Req. 1

|JOB 392 |Cutting Department |Finishing Department |

|Departmental overhead rate |$10 per machine hour |$17 per direct labor hour |

|Direct labor hours incurred in the Finishing Department | |× 6 direct labor hours |

|Machine hours incurred in the Cutting Department |× 8 machine hours | |

|Allocation of manufacturing overhead |$80 |$102 |

The total manufacturing overhead allocated to Job 392 is $182. This consists of $80 of manufacturing overhead in the Cutting Department and $102 of manufacturing from the Finishing Department.

Req. 2

The manufacturing cost of Job 392...