Product costing in an ABC system (9th Edition)
The August Manufacturing Company in Rochester, Minnesota, assembles and
tests electronic components used in handheld video phones. Consider the
following data regarding component T24:
The activities required to build the component follow:
Requirements
1. Complete the missing items for the two tables.
2. Why might managers favor this ABC system instead of August's older
system, which allocated all conversion costs on the basis of direct
labor?
Click here for the solution: The August Manufacturing Company in Rochester, Minnesota, assembles and tests electronic components used in handheld video phones
Showing posts with label phones. Show all posts
Showing posts with label phones. Show all posts
Wednesday, September 23, 2015
Thursday, July 2, 2015
Norwel company manufactures miniature circuit boards used in wireless phones and personal organizers
Norwel company manufactures miniature circuit boards used in wireless
phones and personal organizers. On January 2, 2014, Norwel purchased a
circuit board stamping machine at a retail price of $12,000. Norwel paid
5% sales tax on this purchase. Norwel paid a contractor $1,400 for a
specially wired platform for the machine, to ensure non-interrupted
power to the machine.
Norwel estimates the machine will have a 4-year useful life, with a
residual value of $2,000 at the end of 4 years. Norwel uses
straight-line depreciation and employs the half-year convention in
accounting for partial-year depreciation (that is, it takes a half year
of depreciation in the first year of an asset’s useful life). Norwel’s
fiscal year ends on December 31.
1) At what amount should Norwel record the acquisition cost of the machine?
2) What journal entry should Norwel record in 2014?
3) At what amount will the machine be reported in Norwel’s balance sheet at December 31, 2014?
4) On July 1, 2015, Norwel decides to outsource its circuit board
operations to Boards-R-Us Inc. As part of his plan, Norwel sells the
machine (and the platform) to Boards-R-Us for $7,000. What is the impact
of this disposal on Norwel’s 2015 income before taxes?
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