ACCT 2220 Group Discussion 2 Part I ABC Company uses two departments to make its products. Department I is a cutting department that is machine intensive and uses very few employees. Machines cut and form parts and then place the finished parts on a conveyor belt that carries them to Department II where they are assembled into finished goods. The assembly department is labor intensive and requires many workers to assemble parts into finished goods. The company’s manufacturing facility incurs two significant overhead costs: employee fringe benefits and utility costs. The annual costs of fringe benefits are $320,000 and utility costs are $248,000. The typical consumption patterns for the two departments are as follows. Department I Department II Total   Machine hours used 14,300       5,700       20,000      Direct labor hours used 6,700       9,300       16,000         The supervisor of each department receives a bonus based on how well the department controls costs. The company’s current policy requires using a single allocation base (machine hours or labor hours) to allocate the total overhead cost of $568,000. Required: a. Assume that you are the supervisor of Department I. Choose the allocation base that would minimize your department’s share of the total overhead cost. Calculate the amount of overhead that would be allocated to both departments using the base that you selected.  b. Assume that you are the supervisor of Department II. Choose the allocation base that would minimize your department’s share of the total overhead cost. Calculate the amount of overhead that would be allocated to both departments using the base that you selected.  c. Assume that you are the plant manager and have the authority to change the company’s overhead allocation policy. Formulate an overhead allocation policy that would be fair to the supervisors of both Department I and Department II. Compute the overhead allocations for each department using your policy.  Part II Gizmo Gadgets produces gadgets in three market categories, widget, wydot, and wingit. Gizmo Gadgets has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers.   Category Total Pooled Cost Types of Costs Cost Driver   Unit $ 718,900 Indirect labor wages, supplies, depreciation,     machine maintenance Machine hours   Batch 694,100 Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Number of production orders   Product 210,400 Research and development Time spent by research department   Facility 416,000 Rent, utilities, maintenance, admin. salaries, security Square footage Additional data for eac.

1. ACCT 2220 Group Discussion 2
Part I
ABC Company uses two departments to make its products.
Department I is a cutting department that is machine intensive
and uses very few employees. Machines cut and form parts and
then place the finished parts on a conveyor belt that carries
them to Department II where they are assembled into finished
goods. The assembly department is labor intensive and requires
many workers to assemble parts into finished goods. The
company’s manufacturing facility incurs two significant
overhead costs: employee fringe benefits and utility costs. The
annual costs of fringe benefits are $320,000 and utility costs are
$248,000. The typical consumption patterns for the two
departments are as follows.
Department I
Department II
Total
Machine hours used
14,300
5,700
20,000
Direct labor hours used
6,700
9,300
16,000
The supervisor of each department receives a bonus based on
how well the department controls costs. The company’s current
policy requires using a single allocation base (machine hours or
labor hours) to allocate the total overhead cost of $568,000.

2. Required:
a.
Assume that you are the supervisor of Department I. Choose the
allocation base that would minimize your department’s share of
the total overhead cost. Calculate the amount of overhead that
would be allocated to both departments using the base that you
selected.
b.
Assume that you are the supervisor of Department II. Choose
the allocation base that would minimize your department’s share
of the total overhead cost. Calculate the amount of overhead
that would be allocated to both departments using the base that
you selected.
c.
Assume that you are the plant manager and have the authority to
change the company’s overhead allocation policy. Formulate an
overhead allocation policy that would be fair to the supervisors
of both Department I and Department II. Compute the overhead
allocations for each department using your policy.
Part II
Gizmo Gadgets produces gadgets in three market categories,
widget, wydot, and wingit. Gizmo Gadgets has traditionally
allocated overhead costs to the three products using the
companywide allocation base of direct labor hours. The
company recently implemented an ABC system when it installed
computer-controlled assembly stations that rendered the
traditional costing system ineffective. In implementing the ABC
system, the company identified the following activity cost pools
and cost drivers.
Category

3. Total Pooled Cost
Types of Costs
Cost Driver
Unit
$
718,900
Indirect labor wages, supplies, depreciation,
machine maintenance
Machine hours
Batch
694,100
Materials handling, inventory storage, labor for setups,
packaging, labeling and shipping, scheduling
Number of production orders
Product
210,400
Research and development
Time spent by research department
Facility
416,000
Rent, utilities, maintenance, admin. salaries, security
Square footage
Additional data for each of the product lines follow.
Widget
Wydot

4. Wingit
Total
Direct materials cost
$
35.40
/unit
$
24.90
/unit
$
30.10
/unit
—
Direct labor cost
$
14.50
/hour
$
14.50
/hour
$
17.70
/hour
—
Number of labor hours
5,600
12,400

5. 2,600
20,600
Number of machine hours
14,000
45,000
20,000
79,000
Number of production orders
280
2,100
120
2,500
Research and development time
14
%

6. 17
%
69
%
100
%
Number of units
16,000
42,000
15,000
73,000
Square footage
20,000
48,000
12,000
80,000

7. Required:
a.
Determine the total cost and cost per unit for each product line,
assuming that overhead costs are allocated to each product line
using direct labor hours as a company wide allocation base.
Also determine the combined cost of all three product lines.
b.
Determine the total cost and cost per unit for each product line,
assuming that an ABC system is used to allocate overhead costs.
Determine the combined cost of all three product lines.
Part III
ABC company has the opportunity to accept one of two jobs; it
cannot accept both because they must be performed at the same
time and ABC does not have the necessary labor force for both
jobs. Indeed, it will be necessary to hire a new supervisor if
either job is accepted. Furthermore, additional insurance will be
required if either job is accepted. The revenue and costs
associated with each job follow.
Cost Category
Job A
Job B
Contract price
$
808,000
$
691,000
Unit-level materials
244,800

8. 225,150
Unit-level labor
250,450
306,600
Unit-level overhead
18,100
14,400
Supervisor’s salary
115,670
115,670
Rental equipment costs
25,800
28,400
Depreciation on tools (zero market value)
20,900

9. 20,900
Allocated portion of companywide facility-sustaining costs
11,000
8,900
Insurance cost for job
17,600
17,600
Required:
a-1.
Calculate the contribution to profit from Job A and Job B.
a-2.
Assume that ABC has decided to accept one of the two jobs.
Recommend which job to accept?
b-1.
Assume that Job A is no longer available. ABC’s choice is to
accept or reject Job B alone. Calculate the contribution to profit
from Job B.
b-2.
Based on your answer to requirement b-1, recommend whether
to accept or reject Job B.
Part IV
Seymour Chemical Company makes a variety of cosmetic
products, one of which is a skin cream designed to reduce the

10. signs of aging. Seymour produces a relatively small amount
(14,000 units) of the cream and is considering the purchase of
the product from an outside supplier for $5.70 each. If Seymour
purchases from the outside supplier, it would continue to sell
and distribute the cream under its own brand name. Seymour’s
accountant constructed the following profitability analysis.
Revenue (14,000 units × $14.0)
$
196,000
Unit-level materials costs (14,000 units × $1.70)
(23,800
)
Unit-level labor costs (14,000 units × $.60)
(8,400
)
Unit-level overhead costs (14,000 × $.40)
(5,600
)
Unit-level selling expenses (14,000 × $.20)
(2,800
)
Contribution margin
155,400

11. Skin cream production supervisor’s salary
(57,000
)
Allocated portion of facility-level costs
(13,900
)
Product-level advertising cost
(46,000
)
Contribution to companywide income
$
38,500
Required:
a.
Calculate the total avoidable costs.
b-1.

12. Calculate the total avoidable cost per unit.
b-2.
Should Seymour continue to make the product or buy it from the
supplier?
c-1.
Suppose that Seymour is able to increase sales by 10,000 units
(sales will increase to 24,000 units). Calculate the total
avoidable costs.
c-2.
At this level of production, should Seymour make or buy the
cream?
Part V
XYZ Company the following cost of goods sold budget for
April, May, June, and July.
April
May
June
July
Budgeted cost of goods sold
$63,000
$73,000
$83,000
$89,000

13. XYZ had a beginning inventory balance of $3,200 on April 1
and a beginning balance in accounts payable of $13,900. The
company desires to maintain an ending inventory balance equal
to 10 percent of the next period’s cost of goods sold. XYZ
makes all purchases on account. The company pays 70 percent
of accounts payable in the month of purchase and the remaining
30 percent in the month following purchase.
Required:
a.
Prepare an inventory purchases budget for April, May, and June.
b.
Determine the amount of ending inventory XYZ will report on
the end-of-quarter pro forma balance sheet.
c.
Prepare a schedule of cash payments for inventory for April,
May, and June.
d.
Determine the balance in accounts payable XYZ will report on
the end-of-quarter pro forma balance sheet.
Minorities in American Society
Final Exam
Directions: Select ONE question from EACH category and

14. provide a well-developed, researched
answer.
Please type all answers in Microsoft Word or Google Doc.
IMPORTANT: DO NOT include question text
in your reponse…only question number. (For example, do not
write “1. How might education help
combat internalized racism? {Your answer here}.” Instead,
write “1. {Your answer here}.” You may
not work with other students on this exam.
Group One
1. How might education help combat internalized racism?
2. Discuss the four levels of undoing racism at the personal
level.
3. In what ways were early immigration restrictions related to
race?
Group Two
4. Discuss how race and wealth are connected to social
development.
5. Explain the critical race theory in relation to land and
property.
6. Choose an example of a reality construct and then describe
the four states of such constructs in

15. action.
Group Three
7. Discuss how critical race theorists view health disparities.
8. Explain how economic inequality affects the health of those
on the lower end of the
socioeconomic spectrum.
9. Explain the fundamental differences between functionalist
theorists and conflict theorists
regarding residential segregation.
Group Four
10. What are the major causes of the re-segregation of
America’s schools?
11. How does the meaning and use of the terms Latino,
Hispanic, and Mexican American differ?
12. What are the main tenets of the theory of color blindness?
Group Five
13. How might intersectionality be used to understand the
experiences of indigenous women?
14. How has the United States legitimized racial constructs?
15. Describe the key features and findings of Adorno’s study