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Problem 17-5B (concluded)
5.
Pup Tent Pop-Up Tent
Selling price $65.00 $200.00
Manufacturing cost per unit 58.46 113.87
6. Departmental overhead rates based on direct labor hours and machine
hours are still volume-based measures and would not improve the
1. Setting up machines Batch level
2. Direct materials $2,500
3. Setting up machines $20,000/25 batches $800/batch
Inspecting components $7,500/5,000 parts $1.50/part
Providing utilities $10,000/5,000 machine hours $2.00/MH
4. ABC gives a better representation of the cost of producing Job 615
because it reflects the resources consumed in the production
1. Examples of activities at Apple and Google:
Ordering raw materials
Receiving raw materials
2. Apple is a manufacturing company as it manufactures and sells
products such as iPods, iPads, iPhones, and computers. Apple also
3. Yes. It could be useful for determining the activities that the
companies perform and identifying the costs associated with each
1.
APPLE
For Year Ended ($ millions)
Sep. 28,
2013
Sep. 29,
2012
Revenues ................................................................
$170,190
$156,508
Expenses* ................................................................
121,911
101,267
Expenses/Revenues ...................................................
0.716
0.647
*Cost of sales plus total operating expenses
GOOGLE
For Year Ended ($ millions)
Dec. 31,
2013
Dec. 31,
2012
Revenues ................................................................
$59,825
$50,175
Expenses* ................................................................
45,859
37,415
Expenses/Revenues ...................................................
0.767
0.746
*Cost of goods sold plus total operating expenses
Google has a higher ratio of expenses to revenues in both years.
2. Google may want to analyze its costs in terms of the activities it is
3. Some activities associated with opening a new retail location include:
Finding property to buy or rent
1. Employees have the responsibility to be honest when asked for
2. Depending on your position, it may be appropriate to determine if the
redundancy is justified. This would certainly be the responsibility of
3. Your responsibility is to report accurately and objectively. If there
4. Consider:
Are you being objective?
Is the activity you observed happening on a regular basis, or was
it a one-time occurrence?
What are the implications of reporting your findings?
cost, or machine hours. These bases are all highly correlated with the
volume of output. Plantwide and departmental overhead rates based on
these measures are therefore appropriately referred to as “volume-based.”
While the total costs being assigned to products using volume-based
methods may be the same as the costs assigned in activity-base costing,
occur.
An advantage of ABC is that it more accurately divides the total costs
among various product lines based on the resources that go into those
products. Disadvantage of ABC are that it can be difficult and costly to
implement.
Taking It to the Net — BTN 17-5
1-2. Filling an order at a typical fast-food establishment may involve
several people:
3. Some costs in a fast-food restaurant:
Ingredients
Paper products
1. Suja Juice Co. would need to:
Create the product (or contract with someone to do this)
2. Generally, we would want to assign the costs associated with product-
specific activities to the products that consumed them, so we would not
want the cost of new products to be assigned to existing products. If
1. Apple’s three largest geographic segments are:
APPLE
Net sales ($ millions)
2013
Americas (North and South America) ..............................
$62,739
Europe ................................................................
37,883
Greater China (China, Hong Kong, and Taiwan) ..............
25,417
2. Samsung’s three largest geographic segments are:
SAMSUNG
Net sales* (₩ millions)
2013
America ................................................................
₩69,383,426
Europe ................................................................
52,678,385
Asia/Africa ................................................................
43,696,327
*Reported as “revenue from external customers”
3. Customer service activities likely vary greatly across geographic
markets. While all customers expect good service, differences in
Apple.
