StudyXY
RegisterLog in

ACC/349 Implementing Activity-Based Costing in R&D Departments: A Case Study of Ideal Manufacturing Company

A case study on implementing Activity-Based Costing (ABC) in the R&D department of Ideal Manufacturing Company.

Charlotte Kelly
Contributor
4.5
31
5 months ago
Preview (2 of 3 Pages)
100%
Purchase to unlock

Page 1

ACC/349 Implementing Activity-Based Costing in R&D Departments: A Case Study of Ideal Manufacturing Company - Page 1 preview image

Loading page image...

ACC/349Implementing Activity-Based Costing in R&D Departments: ACase Study of Ideal Manufacturing CompanyTeamCACC/349BYP 4-2 Ideal Manufacturing Companyof Sycamore, Illinois has supported a research anddevelopment (R&D) department that has for many years been the sole contributor to thecompany’s new farm machinery products. The R&D activity is an overhead cost center thatprovides services only to in-house manufacturing departments (four different product lines),all of which produce agricultural/farm/ranch related machinery products. The department hasnever sold its services outside, but because of its long history of success, larger manufacturersof agricultural products have approached Ideal to hire its R&D department for specialprojects. Because the costs of operating the R&D department have beenspirallinguncontrollably, Ideal’s management is considering entertaining these outside approaches toabsorb the increasing costs. But, (1) management doesn’t have any cost basis for chargingR&D services to outsiders, and (2) it needs to gain control of its R&D costs. Managementdecides to implement an activity-based costing system in order to determine the charges forboth outsiders and the in-house users of the department’s services. R&D activities fall intofour pools with the following annual costs.Market analysis$1,050,000Product design2,280,000Product development3,600,000Prototype testing1,400,000Activity analysis determines that the appropriate cost drivers and their usage for the fouractivities are:TotalActivitiesCost DriversEstimated DriversMarket analysisHours of analysis15,000 hoursProduct designNumber of designs2,500 designsProduct developmentNumber of products90 productsPrototype testingNumber of tests700 testsInstructions(a) Compute the activity-based overhead rate for each activity cost pool.Answer toBYP 4-2 (a)Activity-based overhead rate for Market analysis= Total Annual Cost for Market Analysis / Number of Hours of analysis

Page 2

ACC/349 Implementing Activity-Based Costing in R&D Departments: A Case Study of Ideal Manufacturing Company - Page 2 preview image

Loading page image...

Preview Mode

This document has 3 pages. Sign in to access the full document!

Study Now!

XY-Copilot AI
Unlimited Access
Secure Payment
Instant Access
24/7 Support
Document Chat

Document Details

University
University of Phoenix
Course
ACC 349
Subject
Accounting

Related Documents

View all
Solved Assignments

ACC 349 Final Exam: Managerial and Cost Accounting Concepts

Final exam on managerial and cost accounting principles.

Solved Assignments

ACC 349 Implementing Activity-Based Costing at Starn Tool & Manufacturing

An assignment on implementing Activity-Based Costing (ABC) at Starn Tool & Manufacturing, focusing on cost reduction strategies.

Solved Assignments

ACC/349 Analysis and Correction of Journal Entries: Impact on Financial Statements

An analysis of journal entries and their impact on financial statements, with a focus on corrections and adjustments.

Class Notes

Accounting

what really is accounting?

5.0
Class Notes

Master Managerial Accounting Techniques

Honors Managerial Accounting course led by Dr. Michael Newman, focusing on cost analysis, ethics, communication, and real-world application through interactive discussions, case studies, and presentations.

Class Notes

Controlling and Reporting of Real Assets

Overview of asset impairment recognition in accounting: when an asset’s value declines due to damage, market loss, or legal issues, a journal entry records the loss to reflect the asset’s reduced value. Key for reporting real assets like PPE.

Solved Assignments

Team A Week 5 Problems

Problem-solving set from Week 5, covering various academic concepts.

Solved Assignments

Accounting Audit Final Exam MCQs 2015

Multiple-choice questions covering key auditing and accounting principles.

Solved Assignments

Sarbanes Oxley Act, GAAP and IFRS

Overview of the Sarbanes-Oxley Act and its impact on GAAP and IFRS compliance.

Solved Assignments

IFRS or US GAAP Which is the Best Reporting Standard

A comparative analysis of IFRS and US GAAP reporting standards.