# work

Topics: Cartesian product, Chemistry, Binary relation Pages: 8 (432 words) Published: February 12, 2014
10/2/2014

Questions 1 to 4
Plant A produces chemical sprays and its entire production is categorized into 5 cost-consuming functions. The following table shows (in percentages) how one function precedes another, as projected by the management of Plant A: Management* Recruitment

Chemicals

Laboratory Canning

Management

-

-

-

-

Recruitment

25%

-

-

-

-

Chemicals

25%

20%

-

-

-

Laboratory

25%

40%

100%

-

-

Canning

25%

40%

-

100%

-

-

*For instance, equal portions of the Management function precedes all other functions, as projected.

Function
(hours)

Direct Product Costs (\$)

Indirect Product Costs (\$)

Duration Required

Management

-

400,000

5,000

Recruitment

1,800,000

400,000

20,000

Chemicals

800,000

1,100,000

20,000

Laboratory

400,000

400,000

50,000

Canning

300,000

900,000

To account for the borne of indirect product costs in these functions, the management considered various approaches and finally chose a step-down approach in the sequence in which one function precedes another. For each batch of production, two separate cost applications would be made, at the completion of the Laboratory function, as well as at the completion of the Canning function. The application amount is based on a predetermined rate for each function, and the actual duration required (in hours) for each respective function. For this quarter, the management of Plant A had projected a total production of 10,000,000 cans with the following breakdown in requirement from the various functions:

Based on the projections, what would be the
predetermined rate for the application of indirect costs to  production at the completion of the Canning function?

5,000

1.
2.
3.
4.

\$0.12 per can
\$24 per hour
\$240 per hour
\$400 per hour

25%

25%

25%

25%

Based on these projections, the predetermined rate for the application of indirect costs to production at the completion of the Laboratory function is \$40 per hour. 1

2

3

4

1

10/2/2014

Assuming a direct approach was chosen, instead of a  step‐down approach, in accounting for the indirect  product costs borne in the functions, what would have  been the predetermined rate for the application of costs  at the completion of the Laboratory function, holding all  other factors constant?

1.
2.
3.
4.

\$0.19 per can
\$16 per hour
\$30 per hour
\$38 per hour

25%

25%

25%

Assuming only one combined application of indirect
costs were to be made, to each batch of production, at  the completion of the Canning function, instead of the  current approach of two separate applications of costs,  what would have been the predetermined rate for this  combined application of costs, holding all other factors  constant?

25%

1.
2.
3.
4.

1

2

3

4

\$0.32 per can
\$38 per hour
\$278 per hour
\$640 per hour

25%

1

25%

2

25%

3

25%

4

Assuming the plant could measure the actual duration  each function was required in each batch of production,  and an activity‐based costing approach was adopted to  apply indirect product costs by function, what would have  been the total indirect product costs applied, under this  approach, to a batch of completed production that

required exactly 1 hour of each function ?
25%

1.
2.
3.
4.

25%

25%

25%

\$0
\$32
\$343
\$541
1

2

3

4

2

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