Running head: ACTIVITY BASED COSTING 1 PAGE 5 ACTIVITY BASED COSTING Activity Based Costing Student’s Name Institutional Affiliations Activity Based Costing Activity-based costing (ABC) is a concept which refers to the accounting method whereby the costs are identified and assigned to the overhead activities and subsequently to the products. As such, an activity based costing is a method that recognizes the relationship between costs, overhead activities and the products. Consequently, through this relationship, the method assigns indirect costs to the products less indiscriminately as compared to the traditional methods (Kenton, 2018). However, using this method of activity based costing, some costs often become difficult to assign. For instance, indirect costs such as office staff salaries and management sometimes become very difficult to assign to the products. As a consequence, this method is usually applied in the manufacturing industry because in enhances the reliability of cost data thus producing almost accurate costs and results into better cost classification as incurred by the company during the production process. Furthermore, the method is important in product line profitability analysis, product costing, service pricing and customer profitability analysis. The ABC method is based on activities which refers to any unit of work task or event such as setting up machines for production purposes, distribution of finished products, operating machines, designing products, among others. Since the activities use overhead costs, they are considered cost objects. In addition, under this system, an activity may refers to any event or transaction that is a cost driver. A cost driver, which is also referred to as an activity driver, is used to denote an allocation base. Some of the examples of cost drivers include power consumed, machine setups, maintenance requests, quality inspections, purchase orders and production orders. On the other hand, activity measures are categorized into two groups including transaction drivers and duration drivers. Transaction drivers pertains to counting of the number of times an activity occurs whereas duration drivers measure the length of time an activity takes to complete. Activity based costing is effective in the process of improving the costing process in three different ways. First, it increases the number of cost pools that are used to group overhead costs. As such, instead of grouping all costs of a company into one large pool, the method groups the pools based on activities. In addition, it comes up with new bases for allocating overhead costs to items. As a result, the costs are allocated depending on the activities responsible for the costs and not the volume measures such as dir.

1. Running head: ACTIVITY BASED COSTING
1
PAGE
5
ACTIVITY BASED COSTING
Activity Based Costing
Student’s Name
Institutional Affiliations
Activity Based Costing
Activity-based costing (ABC) is a concept which refers to the
accounting method whereby the costs are identified and
assigned to the overhead activities and subsequently to the
products. As such, an activity based costing is a method that
recognizes the relationship between costs, overhead activities
and the products. Consequently, through this relationship, the
method assigns indirect costs to the products less
indiscriminately as compared to the traditional methods
(Kenton, 2018). However, using this method of activity based
costing, some costs often become difficult to assign. For
instance, indirect costs such as office staff salaries and
management sometimes become very difficult to assign to the
products. As a consequence, this method is usually applied in
the manufacturing industry because in enhances the reliability
of cost data thus producing almost accurate costs and results
into better cost classification as incurred by the company during
the production process. Furthermore, the method is important in
product line profitability analysis, product costing, service
pricing and customer profitability analysis.
The ABC method is based on activities which refers to any unit
of work task or event such as setting up machines for

2. production purposes, distribution of finished products,
operating machines, designing products, among others. Since
the activities use overhead costs, they are considered cost
objects. In addition, under this system, an activity may refers to
any event or transaction that is a cost driver. A cost driver,
which is also referred to as an activity driver, is used to denote
an allocation base. Some of the examples of cost drivers include
power consumed, machine setups, maintenance requests, quality
inspections, purchase orders and production orders. On the
other hand, activity measures are categorized into two groups
including transaction drivers and duration drivers. Transaction
drivers pertains to counting of the number of times an activity
occurs whereas duration drivers measure the length of time an
activity takes to complete.
Activity based costing is effective in the process of improving
the costing process in three different ways. First, it increases
the number of cost pools that are used to group overhead costs.
As such, instead of grouping all costs of a company into one
large pool, the method groups the pools based on activities. In
addition, it comes up with new bases for allocating overhead
costs to items. As a result, the costs are allocated depending on
the activities responsible for the costs and not the volume
measures such as direct labor costs or machine hours. Finally,
the ABC method changes the nature of most of the indirect costs
thus it makes costs that were previously considered indirect
such as power, inspection and depreciation to be attributable to
certain activities. According to Kenton (2018), the ABC method
transfers overhead costs from products with high volume to
those with low volume thus raising the unit costs of low volume
products.
Ethical Issues in the Scenario
The controller Erin Jackson is indeed acting ethically. First,
upon realizing that the deluxe-model electric motor is running

3. at a loss, she set out to introduce a new costing method that
would be more profitable to the company. In addition, despite
the fact that Alan Tylor, the production manager for deluxe-
model electric motor, is her personal friend, she refuses to bow
to her pressure to abandon the new costing method and to
change the figures so that Alan cannot lose her job. Finally, she
promises to revise her figures to see if she had made any errors.
On the contrary, Alan Tylor is not acting ethically by requesting
Erin to massage the number a little bit to prevent her from
losing her job. Her request therefore means that she is putting
her personal desires before the goals of the company. Jackson’s
ethical obligation is to the entire company including the
president and her friend. As such, she ought to make ethical
considerations based on the views of all the members of the
company.
References
Kenton, W. (2018). Activity-Based Costing (ABC).
Investopedia.
Project Plan for an Online Consultancy Freelance Firm
Andre Walton
BUS375: Project Managment
Professor Stieber William
Feb. 03, 2019
Introduction
Starting an online consultancy freelance firm is one of the
noblest projects in the current time. Freelancers have begun to
become more and more people's choices. It has changed the
monopoly of a certain group of elites or professionals in a
traditional era for a certain market or field. They have
reorganized and structured the resources and channels of the
world (Porter and Heppelmann, 2014). And the community, so

4. that goods, services, information can be one-to-one
correspondence according to the needs and supply
configuration, thus optimizing the efficiency between resources
and supply.
Being retired service member, I intend to initiate an online
project where I will be offering online services to companies
and budding entrepreneurs on areas such as creation of
marketing plans, business plans, business proposals and related
areas. I decided to focus on this project because there is a wide
market gap in the field. Most managers do not have time to
create new proposals, write plans and often go for Internet to
find assistance. In most of the online forums, it is not
uncommon to find a person looking for someone who can carry
out and write a business plan or a grant essay. In order to
implement project, I will first create a website where my
potential clients can post their orders. I will then train
employees who will be responsible for completing the orders
posted as per the instructions. I will also have to create a head
office where I will work as an overall manager to supervise the
payment and completion of orders. Venturing into this project
will enable me fill the market gap and also get more profits.
Project goals
1. To create and market the freelance website aggressively.
2. To always manage employees and motivate them
appropriately.
Project objectives
1. To fill the existing market gap by providing freelance
services to hundreds of busy managers and entrepreneurs
2. To generate profit and expand the client base
Project structure
The project structure will be designed such that there will be
three major departments. Since everything will be done online, I
will take the role of overall manager. My roles will include
managing the payments, supervising the management and
execution of the orders and ensuring that the website is
maintained. There will be also a department related to the

5. customer service. This will comprise three to four employees
who will be on standby such that any client with any form of
inquiry can be attended to on time. The support team will also
facilitate the allocation of orders to the writers team. The third
department will be represented by the writers team. The
department will be in charge of execution of the orders. The last
department will be the quality assurance department. The role
of the department would be to go through completed orders and
ascertain whether they meet the instructions asked by the client.
The figure below summarizes the structure of the proposed
project.
Stakeholders
1. Customers
Customers stands out as the key stakeholders in the proposed
project. The main customers will comprise the government
agencies, non-governmental organizations, companies and
individual investors. Current research reveals that most
companies outsource consultancy services. It can be seen that
the current Internet platform connection effect is making more
and more people in different fields stand out. The platform
gathers professional individuals, professional individuals gather
fans, and individuals bring their own traffic fans to form brands
and produce professional content docking enterprises and
Consumers (Porter and Heppelmann, 2014). In his famous
"Crowdsourcing", Jeff Howe, a senior editor of Wired magazine
in the United States, pointed out that elites or professionals at
different levels in various fields have occupied the right to
speak and decide in the industry. However, in the Internet age,
everyone can control the right to speak by means of the open
and sharing characteristics between platforms, so this part of
people began to compete for or even deprive the monopoly of
traditional professional fields, making the field a crowdsourcing
model (Hills, 2012). In other words, businesses that are

6. monopolized by a group in various fields will be relied on by
many individuals to export their own professional content and
skills and occupy a large number of fans, forming a unique
voice and subverting these traditional organizations. Many areas
of the world. It will no longer be monopolized or controlled by
the original group of people.
2. Marketers
Another crucial stakeholder will be marketing agencies. In order
to bring more traffic to the site, it is important to have
marketing agency to help in marketing of the website. The
marketing agency will be responsible in aspects such as blog
writing, SEO, social media advertisement and other marketing
needs related to the website.
3. Employees
The success of the project will depend on the dedication and
effort by employees. Having employees with diverse skills and
areas of specialization will increase the number of projects and
orders and hence increase the profits. Employees therefore
represent the backbone for success of the project.
References
Porter, M. E and Heppelmann, J. E. (2014). How Smart,
Connected Products Are Transforming Competition. Harvard
Business Review. Retrieved from: https://hbr.org/2014/11/how-
smart-connected-products-are-transforming-competition
Hills, C. W. L. (2012). International Business: Competing in the
Global Market Place. 9th ed. England: McGraw-Hill Higher
Education
Overall manager
Support team department
Writers department

7. Quality assurance department
Running Head: ACCOUNTING1
ACCOUNTING 8
Title: ACCOUNTING
Student’s Name:
Institution:
Exercise 3-23
1. Manufacturer of swimming pool chemicals- Process costing

8. 2. Manufacturer of custom hot tubs and spas- Job posting
3. Architectural firm- Job posting
4. Manufacturer of ceramic tile- Process costing
5. Producer of yogurt- Process costing
6. Manufacturer of custom tool sheds- Job posting
7. Manufacturer of papers clips- Process costing
8. Engineering consulting firm- Job posting
9. Manufacturer of balloons- Process costing
10. Manufacturer of custom emergency rescue vehicles- Process
costing
Exercise 3-27
Compute the following
1. The company’s prime cost for January
2. The total manufacturing cost for January
3. The cost of goods manufactured for January
4. The cost of goods sold for January
5. The balance in the manufacturing overhead account on
January 31. Debit or credit?
Prime cost= direct labor cost + direct material cost
Total manufacturing cost= Prime cost+ Manufacturing overhead
cost
Cost of goods manufactured= Total manufacturing cost +
Beginning WIP Inventory- Ending WIP Inventory
Cost of goods sold= Cost of goods manufactured + Beginning
Finished Goods Inventory- Ending Finished Goods Inventory
Direct materials used for manufacturing of finished goods
Raw materials inventory, January 1
$133,000
Add: Raw Materials purchase during January
$190,000
Total raw materials inventory available for consumption
$323,000
Less: Raw materials inventory, January 31
$124,000
Raw materials used or consumed during January

9. $199,000
The prime cost, total manufacturing cost, the cost of goods
manufactured for January
Direct raw materials cost (working Note 1)
$199,000
Direct labor Cost
$300,000
Prime cost for January
$499,000
Applied manufactured overhead (60% of direct labor cost)
$180,000
Total manufacturing costs for January
$679,000
Add: Work in process inventory, January 1
$233,000
Less: Work in process inventory, January 31
$251,000
Cost of goods manufactured for January
$661,000
Cost of goods sold for January
Finished goods inventory, January 1
$125,000
Add: Cost of goods manufactured for January
$661,000
Total cost of goods available for sale
$786,000

10. Less: Finished goods inventory, January 31
$117,000
Cost of goods sold for January
$669,000
The balance in the manufacturing overhead account on January
31
Applied manufacturing overhead cost= 60% of the direct labor
cost= 60% × $300,000= $180,000 (Credit)
Actual manufacturing overhead cost= $170,000 (Debit)
Balance in the manufacturing overhead account on January 31=
$10,000 (Credit)
Problem 3-42
Twisto Pretzel Company
Schedule of cost of Goods Manufactured
For the year of 20×1
Particulars
Amount $
Amount $
Direct Materials:
Raw material inventory on 31.12. ×0
10,100
Add: Purchase of raw material
39,000
Raw material available for use
49,100
Deduct: Raw material inventory 31.12. ×1
11,000

11. Raw material used
38,100
Direct labour
79,000
Manufacturing overhead:
Insurance on factory and equipment
3,600
Indirect material used
4,900
Depreciation on factory equipment
2,100
Property taxes of factory
2,400
Utilities for factory
6,000
Indirect labor
29,000
Depreciation on factory building
3,800
Rental for warehouse to store raw material
3,100

12. Total actual manufacturing overhead
54,900
Add: over applied overhead
3,100
Overheads applied to work in process
58,000
Total manufacturing
175,000
Add: Work in process inventory on31.12. ×0
8,100
Subtotal
183,200
Deduct: work in process inventory on 31.12. ×1
8,300
Cost of goods manufactured
174,900
Twisto Pretzel Company
Schedule of cost of goods sold
For the year 20×1
Particulars
Amounts $
Finished goods inventory on 31.12. ×0
14,000
Add: cost of goods manufactured

13. 174,000
Costs of goods available for sale
188,900
Deduct: finished goods inventory on 31.12. ×1
15,400
Cost of goods sold
173,500
Deduct: Over applied manufacturing overhead
3,100
Cost of goods sold(adjust for overapplied overhead)
170,400
Twisto Pretzel Company
Income statement
For the year ended December 31, 20×1
Particulars
Amount $
Amount $
Sales revenue
205,800
Deduct: cost of goods sold
170,400
Gross Margin
35,400
Deduct: Selling and administrative overheads
Selling and administrative overheads
13,800
Utilities for selling and administrative offices
2,500

14. Other selling and administrative expenses
4,000
Depreciation on card used by sales personnel
1,200
Rental of space for company president’s office
1,700
23,200
Income before taxes
12,200
Deduct: income tax expenses
5,100
Net Income
7,100
Problem 3-50
The cost of goods manufactured= (the opening work in process+
Total manufacturing costs-closing work in process)
Huron Corporation
Schedule of cost of goods manufactured
For the year ended December 31,20×2
Particulars
Amount $
Amounts $
Direct material
Raw material inventory, January 1
89,000

15. Add: Purchase of raw material
731,000
Raw material available
820,000
Less: raw material inventory, December 31
59,000
Raw material used
761,000
Direct labor
474,000
Manufacturing overhead:
Indirect material
45,000
Indirect labor
150,000
Depreciation of factory building
125,000
Depreciation on factory equipment
60,000
Insurance of factory equipment
40,000
Utilities for factory
70,000

16. Property taxes on factory
90,000
Total manufacturing overhead
580,000
Less: under applied manufacturing overhead
($580,000-$577,500)
2,500
Total manufacturing costs
1,812,500
Add: work in progress inventory, January 1
0
Less: work in progress inventory, December
40,000
Cost of goods manufactured
1,772,500
Huron Corporation
Schedule of cost goods sold
For the year ended December 31, 20×2
Particular
Amounts
Finished goods inventory, January 1
35,000
Add: cost of goods manufactured
1,772,500
Cost of goods available for sale
1,807,500
Less: finished goods inventory, December 31

17. 40,000
Cost of goods sold
1,767,500
Add: under applied manufacturing overhead
($580,000-$577,500)
2,500
Cost of goods sold (adjusted for under applied overhead)
1,770,000
Huron Corporation
Income statement
For the year ended December 31, 20×2
Particulars
Amounts $
sales revenue
2,105,000
Less: cost of goods sold
1,770,000
Gross margin
335,000
Selling and administrative expenses
269,000
Income before taxes
66,000
Income tax Expense
25,000
Net income
41,000
Huron Corporation
Schedule of cost of goods manufactured
For the year ended December 31,20×2
Particulars
Amount $
Amounts $
Direct material

18. Raw material inventory, January 1
89,000
Add: Purchase of raw material
731,000
Raw material available
820,000
Less: raw material inventory, December 31
59,000
Raw material used
761,000
Direct labor
474,000
Manufacturing overhead:
Indirect material
45,000
Indirect labor
150,000
Depreciation of factory building
125,000
Depreciation on factory equipment
60,000
Insurance of factory equipment

19. 40,000
Utilities for factory
78,000
Property taxes on factory
90,000
Total manufacturing overhead
588,000
Less: under applied manufacturing overhead
($588,000-$580,000)
8,000
Total manufacturing costs
1,815,000
Add: work in progress inventory, January 1
0
Less: work in progress inventory, December
40,000
Cost of goods manufactured
1,775,000
Huron Corporation
Schedule of cost goods sold
For the year ended December 31, 20×2
Particular
Amounts
Finished goods inventory, January 1
35,000
Add: cost of goods manufactured

20. 1,775,000
Cost of goods available for sale
1,810,000
Less: finished goods inventory, December 31
40,000
Cost of goods sold
1,770,000
Add: under applied manufacturing overhead
($580,000-$577,500)
8,000
Cost of goods sold (adjusted for under applied overhead)
1,762,000
Huron Corporation
Income statement
For the year ended December 31, 20×2
Particulars
Amounts $
sales revenue
2,115,000
Less: cost of goods sold
1,762,000
Gross margin
353,000
Selling and administrative expenses
269,000
Income before taxes
84,000
Income tax Expense
25,000
Net income
59,000
References
Hundal, J., Kiwala, S., Feng, Y. Y., Liu, C. J., Govindan, R.,
Chapman, W. C., ... & Griffith, M. (2019). Accounting for
proximal variants improves neoantigen prediction. Nature

21. genetics, 51(1), 175.
Darbon, A., Colombi, D., Valdano, E., Savini, L., Giovannini,
A., & Colizza, V. (2019). Disease persistence on temporal
contact networks accounting for heterogeneous infectious
periods. Royal Society Open Science, 6(1), 181404.
Xing, X., & Yan, S. (2019). Accounting information quality and
systematic risk. Review of Quantitative Finance and
Accounting, 52(1), 85-103.
Crucini, M. J., & Landry, A. (2019). Accounting for real
exchange rates using micro-data. Journal of International Money
and Finance, 91, 86-100.
Running Head: ACCOUNTING1
ACCOUNTING 8
Title: ACCOUNTING
Student’s Name:
Institution:
Chapter 2
Exercise 2-28
1. The tire costs incurred by Ford Motor Company
Product cost, variable, direct material

22. 2. The sales commissions paid to the sales force of Dell Inc.
Period cost, Variable
3. Wood glue consumed in the manufacture of Thomasville
furniture
Product cost, variable, direct material
4. Hourly wages of refinery security guards employed by
ExxonMobil Corporation
Product cost, variable, manufacturing overhead
5. The salary of a financial vice president of Hewlett Packard
Period cost, Fixed
6. Advertising costs of Coca-Cola
Period costs, Fixed
7. Straight line depreciation on factory machinery of Boeing
Corporation.
Product cost, fixed, manufacturing overhead
8. Wages of assembly line personnel of Whirlpool Corporation
Product cost, variable, direct labor
9. Delivery costs incurred by Ben & Jerry’s for a shipment of
their ice cream to a grocery store
Period cost, variable
10. Newsprint consumed in printing The New York Times
Product cost, variable, direct material
11. Plant insurance costs in Texas instruments
Product cost, fixed, manufacturing overhead
12. LED costs incurred in light bulb manufacturing of GE
Lighting.
Product cost, variable, direct material
Problem 2-37
1. Evaluate the costs just cited, and determine whether the
associated dollar amounts would be found on the firm’s balance
sheet, income statement, or schedule of cost of goods
manufactured. (Note: in some cases, more than one answer will
apply)
· Salaries of players on the Boston Red Sox- Cost-of- Goods
Manufactured
· Year-end completed goods of Levi Strauss jeans- Balance

23. Sheet
· Executive compensation costs at Home Depot: -Balance Sheet
and Income Statement
· Advertising costs for Sony- Income Statement
· Costs incurred during the period to insure a Ford plant against
fire and floodlosses- Income Statement
· Current year's depreciation on a Carnival Cruise Line ship-
Income Statement/Balance Sheet
· The cost of printer ink and paper used during the period by
Shutterfly-Balance Sheet
· Assembly-line wage cost incurred at a Kona bicycle plant-
Income Statement
· Year-end production in process at Lenovo Computer
manufacturers- Cost-of- GoodsManufactured
· The cost of products sold to customers of a Target store- The
cost of products sold
· The cost of products sold to distributors of carpet
manufacturer Shaw Floors- income statement
2. What major assets will normally be insignificant for service
enterprises and relatively substantial for retailers, wholesalers
and manufacturers? Briefly discuss.
Inventory is the asset which differs in the businesses. However,
the service businesses in the case do not carry an inventory. On
the other hand, the wholesalers and the retailers always stock
inventory which can be considerable in a way. Moreover, the
manufacturers carry an inventory which is subdivided into three
categories such as finished goods, work in process and raw
materials.
3. Briefly explain the major differences between income
statements of service enterprises versus those of retailers,
wholesalers and manufacturers.
The similarities in the inventory are that the inventories are
carried out for the purposes of making sales by the business. As
far as the differences are concerned, the manufacturing firms
are made to produce their goods while the retailers are made to
purchase merchandise inventory

24. Problem 2-45
Cape Cod short shop manufactures T-shirts and decorates them
with custom designs for retail sale on the premises. Several
costs incurred by the company are listed below. For each cost,
indicate which of the following classifications best describe the
cost. More than one classification may apply to the same cost
item.
Cost classifications
a. Variable
b. Fixed
c. Period
d. Product
e. Administrative
f. Selling
g. Manufacturing
h. Research and development
i. Direct material
j. Direct labor
k. Manufacturing overhead
Cost items
1. Cost of fabric used in T-shirt- Direct material
2. Wages of shirt makers- direct labor
3. Cost of new sign in front of retail T-shirt shop- direct labor
4. Wages of the employee who repair the firm’s sewing
machines- direct labor
5. Cost of electricity used in the sewing department- variable
6. Wages of T-shirts designers and painters- direct labor
7. Wages of sales personnel- direct labor
8. Depreciation on sewing machines- Selling
9. Rent on the building. Part of the building’s first floor is used
to make and paint T-shirts. Part of it is used for the retail sales
shop. The second floor is used for administrative offices and
storage of raw material and finished goods- period
10. Cost of daily advertisements in local media- Period and
fixed
11. Wages of designers who experiment with new fabrics, paints

25. and T-shirt designs- direct labor
12. Cost of hiring a pilot to fly along the beach pulling a banner
advertising the shop- Period and fixed
13. Salary of the owner’s secretary- Period and fixed
14. Cost of repairing the gas furnace- Period, variable
15. Cost of insurance for the production employee- Product,
fixed, manufacturing overhead
References
Spiceland, D., THOMAS, W., Nelson, M., TAN, P. H. N., Low,
B., & LOW, K. Y. (2018). Intermediate accounting.
Duska, R. F., Duska, B. S., & Kury, K. W. (2018). Accounting
ethics. Wiley-Blackwell.
Hoque, Z. (2018). Methodological issues in accounting
research. Spiramus Press Ltd.
ETHICS IN MENEGERIAL ACCOUNTING 4

26. ETHICS IN MENEGERIAL ACCOUNTING
Name
Institution
Professor
Course
Running Head: ETHICS IN MENEGERIAL ACCOUNTING 1
Date
According to the given scenario, the actions taken by Jack were
effective since when accounting for accounting errors as per
ethics of the job, on should follow certain steps in order to
solve the following. He was right for he had to stick facts which
is following the given accounted reports to pin point where the
error is coming in. Additionally, he had to go through the report
and cross check all documented information on the applying
overhead costs to ensure he has evidence when he starts
handling the issues occurred. Therefore, the action taken by
Jackson of going by facts was appropriate (Garrison et al.,
2010).
Assuming that after Jackson approaching Brown was
unsuccessful, he has to come up with ethics steps applied in
accounting in order to help the situation in the business. The
following steps will help Jackson to solve the situation in the
organization.
· Collecting evidence
· Outlining the ethical problem
· Determining the obligations
· Determining the outcome
· Overlooking at his character and integrity
· Thinking creative on the possible deed
· Checking his guts

27. · Coming up with appropriate ethical decisions and be ready to
handle the opposing arguments
On realizing that even after approaching Jackson he was no
successful, he has to go by facts in way that he won’t rush for a
conclusion. Jackson has to ask himself various questions like
how, when, why and where did the problem arise in the
accounting process. Although, going by facts as an evidence
maybe challenging due to uncertainty always found within
ethical situations. For, instance, in case no available evidence,
Jackson has to gather as much evidence as possible before
proceeding in order to clarify the type of assumptions he might
be making.
It will not be of good for Jackson to rush to a solution without
determining the ethical challenges in the situation. He will have
to focus on various ethical situations one at a time to be able to
handle the issue at hand. At this moment, Jackson has to
determine both direct and indirect stakeholders and try to
consider how they affected by the problem that arose in the
managerial accounting.
It’s upon Jackson to think of the possible negative and positive
outcomes for the affected individuals by the decisions of what
will be the magnitude of the outcome and the possibility that the
outcome will take place. He has to consider both near and long
term outcomes. More so, he has to focus on the consequences if
the action becomes public concerning the situation experienced
in the organization. After, that he should determine relevant
rights, principles and justice on the same. Some of these
principles are that he should not harm and then formulate a
decision making that solely bases on the situation.
Before making up his mind on the issues, Jackson is supposed
to overlook at what his relevant society members would take the
decision, if it be kind decision from a person of integrity in
such situation. When it comes to coming up with the final
solution, he should ensure he hasn’t forced himself into
unnecessary corner. Having the solutions at hand, he should go
a mile and brainstorm in order to come up with an effective

28. solution that favors the parties engaged in the situation.
Therefore, to ensure whatever kind of decision he takes will be
of help to him and the affected stakeholders, Jackson will have
to ultimately overlook at the actions based on the outcomes,
personality and obligations concepts (Managerial Accounting,
2016).
Reference
Managerial Accounting: Creating Value in a Dynamic Business
Environment (Loose-Leaf) 11e (Hilton/Platt) McGraw-Hill
(2016) 9781259727016, Also available in Hardcover ISBN:
9781259569562
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A.
(2010). Managerial accounting. Issues in Accounting
Education, 25(4), 792-793.
Running Head: SOLUTIONS TO MANAGERIAL
ACCOUNTING EXERCISES 1
SOLUTIONS TO MANAGERIAL ACCOUNTING EXERCISES
13

29. Solution
s to Managerial Accounting Exercises
Student’s Name:
Course Name & Number:
Instructor’s Name:
Institution:
Date Submitted:
Chapter 5: Activity-Based Costing and Management:
Exercise 5-26 Page 201
1. Under a costing system that allocates overhead on the basis
of direct-labor hours, the material-handling costs allocated to
one lens would be what amount?
Material-handling cost per lens:
$50,000 x 200 = $1,000
[(25x200) ÷ (25x200)]A
A Direct-labor hour’s total number

30. Therefore, material-handling cost per lens is $1,000
2. Answer the same question a in requirement (1), but for
mirrors.
Material-handling cost per mirror:
$50,000 x 200 = $1,000
[(25x200) ÷ (25x200)]A
A Direct-labor hour’s total number
Therefore, material-handling cost per mirror is $1,000
3. Under activity-based costing (ABC), the material-handling
activity costs allocated to one lens would be what amount? The
cost driver for the material-handling activity is the number of
material moves.
Material-handling cost per lens:
[($50,000 ÷ (5 + 15)*)] x 5** = $500
25
Where: * Material moves’ total number
** The lens product line material moves’ number
Therefore, the material-handling cost per lens is $500
4. Answer the same question as in requirement (3), but for
mirrors
Material-handling cost per mirror:
[($50,000 ÷ (5 + 15)*)] x 15** = $1,500
25
Where: * Material moves’ total number

31. ** The mirror product line material moves’ number
Exercise 5-27 Page 201
1. Calculate the monthly quality-control cost to be assigned to
the Satin Sheen product line under each of the following
product-costing systems. (Round to the nearest dollar)
a. Traditional system, which assigns overhead on the basis of
direct-labor cost
Quality-control costs = 14.5% x Direct-labor Costs
Quality-control costs assigned to Satin Sheen line = 14.5% x
$27,500
= $3,988
b. Activity-based costing
Activity:
Pool Rate:
Quantity for Satin Sheen:
Assigned Cost
Incoming material inspection
$11.50 Per Type
12 Types
$138
In-Process Inspection
0.14 Per Unit
17.500 Units
$2,450
Product Certification

32. 77.00 Per Order
25 Orders
$1,925
Total Quality-Control Costs Assigned
$4,513
2. Does the traditional product-costing system overcost or
undercost the Satin Sheen product line with respect to quality-
control costs? By what amount?
The traditional product-costing system undercosts Satin Sheen
product line with respect to quality-control costs, by $525 =
$4,513 - $3,988
Exercise 5-28 Page 202
1. Divide these costs into activity cost pools, and identify a cost
driver for assigning each pool of costs to products. Calculate
the total cost in each activity cost pool.
Cost Pool 1: Unit-Level I
Raw materials and components 2,950,000 Yen
Inspection30,000 Yen
Total Cost2,980,000 Yen
Cost driver for assigning pool 1 is raw-material cost
Cost Pool 2: Unit-Level I
Depreciation, Machinery 1,400,000 Yen

33. Electricity, Machinery120,000 Yen
Equipment Maintenance, Wages150,000 Yen
Equipment Maintenance, Parts30,000 Yen
Total Cost1,700,000 Yen
Cost driver for assigning pool 2 is number of units produced
Cost Pool 3: Batch-Level I
Setup Wages 40,000 Yen
Total Cost40,000 Yen
Cost driver for assigning pool 3 is number of production runs.
Cost Pool 4: Product-Sustaining Level
Engineering Design 610,000 Yen
Total Cost610,000 Yen
Cost driver for assigning pool 4 is product parts number
Cost Pool 5: Facility-Level I
Depreciation, Plant 700,000 Yen
Insurance, Plant600,000 Yen
Electricity, Light60,000 Yen
Custodial Wages, Plant40,000 Yen
Property Taxes120,000 Yen
Natural Gas, Heating30,000 Yen
Total Cost1,550,000 Yen
Cost driver for assigning pool 5 include costs allocated towards
supporting departments, costs allocated to products, square
footage, and number of nits manufactured.
Exercise 5-33 Page 203

34. The activities of Finger Lakes Winery can be classified as:
U:Unit-level I
B:Batch-level I
P: Product-sustaining-level
F: Facility-level
Activity:
Classification:
(1)
P
(2)
P
(3)
P
(4)
P
(5)
P
(6)
P
(7)
P
(8)

35. B
(9)
B
(10)
B
(11)
B
(12)
B
(13)
U
(14)
U
(15)
U
(16)
U
(17)
B
(18)
F
(19)
F

36. Exercise 5-34 Page 204
Choose two activities or accounts from each of the four
classifications and explain why you agree or disagree with the
ABC project team’s classification.
Carrier Corporation for each of the activity levels the
definitions that include:
· Unit: occurs every time a unit is produced. For example utility
cost for production equipment. It more often than not relates
directly to production volume
· Batch: performed for each batch acquired as well as produced.
For example, moving raw materials between the production line
and stock room, besides setting-up a machine for a run.
· Product-sustaining: performed towards maintaining product
designs, parts, models, and processes. For example, maintaining
materials bill, expediting parts and issuing product changes
orders. To support key manufacturing capability besides
process, sustaining activities are mandatory.
· Facility: performed towards enabling production. Therefore, at
the most basic level they are fundamental towards supporting
the business entity. For example cleaning and managing the
structure.
Without a doubt, these definitions are consistent with those
provided in the chapter. An argument for the ABC project
team’s classification would be that the activity was
characterized by the activity-level classification definition. An

37. argument against the ABC project team’s classification would
be that the specific activity did not satisfy the definition. For
instance, conveying materials is a batch-level activity for the
reason that a raw material should be shifted to the product
location whenever a production batch besides run is
commenced. Whereas, a facility-level account includes
depreciation since plant and equipment correspond to the
production facilities provision cost in which manufacturing can
occur.
Exercise 5-35 Page 204:
1. Prepare a schedule showing Redwood Company’s total
selling cost for each order size and the per-skein selling cost
within each order size.
Redwood Company
Selling Costs Computation by Order Size and Skein within Each
Order Size
Order Size
Small
Medium
Large
Total

38. Sales CommissionsA[Unit Cost: $675,000/225,000 = $3.00 Per
Box]
$6,000
$135,000
$534,000
$675,000
CatalogsB [Unit Cost: $295,400/590,800 =$0.50 Per Catalog
127,150
105,650
62,600
295,400
Costs of Catalog SalesC [Unit Cost: $105,000/175,000 = $0.60
Per Skein]
47,400
31,200
26,400
105,000
Credit and CollectionD [Unit Cost: $60,000/6,000 = $10 Per
Order
4,850
24,150
31,000
60,000
Total Cost Per Order Size
$185,400

39. $296,000
$854,000
$1,135,400
Units [Skeins] SoldE
103,000
592,000
2,180,000
Unit Cost Per Order SizeE
$1.80
$0.50
$0.30
A Retail Sales in Boxes x Unit Cost:
Small: 2,000 x $3
Medium: 45,000 x $3
Large: 178,000 x $3
B Catalogs Distributed x Unit Cost
C Catalog Sales x Unit Cost
D Number of Retail Orders x Unit Cost
E Small: [2,000 x 12] + 79,000 = 103,000
Medium: [45,000 x 12] + 52,000 = 592,000
Large: [178,000 x 12] + 44,000 = 2,180,000
Total Cost Per Order Size ÷ Units Sold
2. Explain how the analysis of the selling costs for skeins of

40. knitting yarn is likely to impact future pricing and product
decisions at Redwood Company.
Selling costs analysis demonstrates that small orders cost more
than large orders; which could influence management towards
marketing large orders more insistently as well as offering
discounts for them.
Chapter 6: Activity-Analysis, Cost Behavior, and Cost
Estimation:
Exercise 6-25 Page 259:
1. Use the high-low method to estimate the company’s energy
cost behavior and express it in equation form.
The High-low Method:
Variable Cost/Pint = (Energy cost @ High level – Energy
Cost/Pint @ Low Level)
(High Level – Low Level)
= (24,100 – 22,100)
(41,000 – 21,000)
= $2,000 ÷ 20,000 Pints Produced = $0.10/Pint
Total Cost @ 41,000 Pints = $24,000
Less Variable Cost @ 41,000 Pints (41,000 x $0.10) =$4,100
Fixed Cost = $20,000
Let:
Y represent Total Energy Cost
X represent Number of pints produced

41. Y = 0.10X + $20,000
2. Predict the energy cost for a month in which 26,000 pints of
applesauce are produced.
Y = 0.10X + $20,000
Y = (0.10 x 26,000) + $20,000 = $22,600
Therefore, the energy cost for a month in which 26,000 pints of
applesauce are produced is $22,600
Exercise 6-30 Page 261:
1. Use the high-low method to estimate the variable cost per
tour mile traveled and the fixed cost per month.
Variable Cost/tour mile = (12,500 – 11,000)/(20,000 – 8,000)
= 1,500 ÷ 12,000 = 0.125 per tour mile
Total Cost =$12,500
Total Variable Cost =0.125 x 20,000 =(2,500)
Fixed Cost = 10,000 real
2. Develop a formula to express the cost behavior exhibited by
the company’s maintenance cost.
Let Y represent Total cost
Let X represent Tour miles driven
Therefore, Y = 10,000 + 0.125x
3. Predict the level of maintenance cost that would be incurred
during a month when 22,000 tour miles are driven. Remember to
express your answer in terms of the real).
Using Y = 10,000 + 0.125x
Y = 10,000 + 0.125 x (22,000) = 12,750 real

42. Therefore, the level of maintenance cost that would be incurred
during a month when 22,000 tour miles are driven is 12,750 real
4. Build a spreadsheet: Construct an Excel spreadsheet to solve
all of the preceding requirements. Show how the solution will
change if the following information changes: in March there
were 21,000 miles traveled and the cost was 12,430 real.
The level of maintenance cost could exceed the cost.
Problem 6-35 Page 263:
For each of the cost items described below, choose the graph
(see below) that best represents it.
1. Graph (e)
2. Graph (a)
3. Graph (g)
4. Graph (c)
5. Graph (b)
6. Graph (h)
7. Graph (i)
8. Graph (f)
9. Graph (d)
10. Graph (k)
11. Graph (l)

43. Reference:
Hansen, D.R., & Mowen, M.M. (2017). Managerial accounting
(8th ed.). Boulverd Mason, OH: Thomson Higher Education.