Chapter 17: Quick Study

Here’s a guide for solving each of the Quick Studies (QS) exercises listed: QS 17-1: Computing Plantwide Overhead Rate • Formula: Plantwide Overhead Rate = Total Budgeted Overhead Cost / Total Budgeted Direct Labor Hours o Substitute values: $1,800,000 / 100,000 direct labor hours o Answer: Plantwide overhead rate. QS 17-2: Allocating Overhead—Plantwide Rate • • • Given: Plantwide overhead rate of $20 per direct labor hour. Each product unit uses 3 direct labor hours. Calculation: Overhead cost per unit = Overhead rate × Direct labor hours per unit o Substitute values: $20 × 3 o Answer: Overhead cost per unit. QS 17-3: Allocating Overhead—Plantwide Rate (Machine Hours) 1. Compute Plantwide Overhead Rate: o Formula: Total Budgeted Overhead Cost / Total Budgeted Machine Hours. 2. Allocate Overhead Cost for Job A2: o Multiply plantwide rate by machine hours for Job A2. o Answer: Allocated overhead for Job A2. QS 17-4: Computing Plantwide Overhead Rate (Direct Labor Hours) 1. Compute Plantwide Overhead Rate: o Formula: Total Budgeted Overhead Cost / Budgeted Direct Labor Hours. 2. Calculate Overhead Cost Per Unit: o For each model, multiply plantwide rate by direct labor hours per unit. o Answer: Overhead cost per unit for standard and fast models. QS 17-5: Computing Overhead Rates Using ABC 1. Compute Activity Rates: o Formula for each activity: Budgeted Cost for Activity / Budgeted Activity Driver Units. o Answer: Overhead activity rates for each activity. QS 17-6: Computing Plantwide Overhead Rate (Different Bases) 1. Direct Labor Hours: Total Budgeted Overhead Cost / Budgeted Direct Labor Hours. 2. Machine Hours: Total Budgeted Overhead Cost / Budgeted Machine Hours. o Answer: Plantwide overhead rates for both bases. QS 17-7: Computing Departmental Overhead Rates 1. Calculate Assembly Department Rate using direct labor hours. 2. Calculate Finishing Department Rate using machine hours. o Answer: Departmental overhead rates for Assembly and Finishing. QS 17-8: Allocating Overhead with Departmental Rates 1. Assembly Department: Multiply departmental rate by direct labor hours used. 2. Finishing Department: Multiply departmental rate by machine hours used. o Answer: Total overhead allocated to the job. QS 17-9: Cost Drivers for ABC • Classify each cost driver based on whether it relates to cutting or shipment activities. QS 17-10: Computing Activity Rates for ABC • • Formula: Activity Rate = Budgeted Cost for Activity / Budgeted Activity Driver Units. Answer: Activity rates for each activity. QS 17-11: Computing Activity Rates for ABC • • Same formula as QS 17-10 for each activity. Answer: Activity rates for each activity. QS 17-12: Allocating Overhead Cost Using ABC 1. Multiply activity rates by the actual amount of each activity used by the deluxe model. 2. Divide by the number of units to get the overhead cost per unit. o Answer: Overhead cost per unit for the deluxe model. QS 17-13: Computing Activity Rate and Allocating Cost 1. Activity Rate for hazardous waste disposal = Budgeted Cost / Tons of Hazardous Waste. 2. Allocate Cost to Job 125 using the activity rate and the actual tons used. o Answer: Activity rate and allocated overhead for Job 125. QS 17-14: Activity-Based Costing and Overhead Cost Allocation 1. Activity Rate: Budgeted Cost for Each Activity / Budgeted Activity Driver Units. 2. Allocate Overhead to Job based on the actual usage of each activity. o Answer: Activity rates and overhead allocation to the job. QS 17-15: Classify Activities (Organic Juices) • Classify each activity as unit, batch, product, or facility level. QS 17-16: Classify Activities (Trail Mix) • Classify each activity as unit, batch, product, or facility level. QS 17-17: Activity-Based Costing for Services • Compute Overhead Cost per Job: Total Overhead Cost of Department / Number of Jobs. o Answer: Overhead cost per job for the forensic accounting department. QS 17-18: Allocating Costs Using ABC for a Service Company 1. Compute Technical Support Activity Rate: Budgeted Overhead Cost / Budgeted Calls. 2. Allocate Costs: Multiply the activity rate by actual calls for each model. o Answer: Allocated technical support costs. QS 17-19: Customer Profitability Report • Prepare Report: List revenue, allocated overhead costs, and resulting profit for each customer. This guide includes formulas and general calculation methods for each QS exercise. Let me know if you'd like to see specific calculations or examples for any of these problems!