1

1. Check The following transactions occur for Badger Biking Company during the month of June: a. Provide services to customers on account for $34.000 b. Receive cash of $26.000 from customers in (a) above. c. Purchase bike equipment by signing a note with the bank for $19.000. d. Pay utilities of $3,400 for the current month. Analyze each transaction and indicate the amount of increases and decreases in the accounting equation. (Decreases to account classifications should be entered as a negative.) Transaction Assets Llabilities Stockholders Equity tes (a) (b) increase (b) decrease (c) (d)

2.  Combat Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi-purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gelion cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,585,378. Thus, the predetermined overhead rate is $15.46 or ($1,585,378 = 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and s26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows. Estimated Use of Drivers by Product Estimated Use of Activity Cost Estimated Cost Cost Pools Drivers Overhead Drivers Home Commercial Receiving Pounds $87,100 335,000 215,000 120,000 Forming Machine 155,050 35,000 hours 27,000 8,000 Number Assembling of parts 407,960 217,000 165,000 52,000 Number Testing 49,980 25,500 of tests 15,500 10,000 Painting Gallons 57,838 5,258 3,680 1,578 Packing and Pounds 827,450 335,000 215,000 120,000 shipping $1,585,378 Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.50.) Home Model Commercial Model Total unit cost $ $ Under ABC, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver). (Round overhead rate to 2 decimal places, e.g. 12.25.) ). , ) Activity Cost Pool Overhead Estimated Estimated Activity-Based Use of Cost Drivers Overhead Rate Receiving Pounds per pound S Forming Machine hours per machine hour S Assembling Parts per part S Testing Tests S per test Painting Gallons per gallon s Packing and shipping Pounds per pound S
Packing and shipping Pounds per pound $ $ Prepare a schedule assigning each activity's overhead cost pool to each product based on the use of cost drivers. (Round overhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to 0 decimal places, e.g. 2,500.) Home Model Estimated Use of Activity-Based Drivers Overhead Rates Cost Assigned Commercial Model Estimated Use of Activity- -Based Drivers Overhead Rates Cost Assigned Activity Cost Pool Receiving $ Forming $ Assembling $ Testing $ $ Painting $ Packing and shipping Total costs assigned (a) HT Units produced (b) HE Overhead cost per unit [(a) + (b)] Compute the total cost per unit for each product under ABC. (Round answer to 2 decimal places, e.g. 12.25.) Home Model Commercial Model Total cost per unit $ $ Classify each of the activities as a value-added activity or a non-value-added activity. Activity Receiving Forming Assembling Testing . Painting Packing and shipping.