How to Write a Information Memorandum

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					Instructions for the Microsoft Excel Templates

Extensive detail and information is contained within the manual.

Striking the "F1" key or following the path "Windows>Excel Help" will invoke the Office Assistant
and bring up one of several help menus.

Type your name into the cell "C2". This will be copied by formula to the rest of the pages as required.

Type the course identifier into cell "C3". This will be copied by formula to the rest of the pages as required.

Type the date into cell "C4". This will be copied by formula to the rest of the pages as required.

The challenge is identified for you in cell "C5". This will be copied by formula to the rest of the pages as required.

In the date column enter the date in any of several formats and Excel will format it into "MMM DD"
unless "MMM DD, YY" is required.

If more than one page is preformatted into the problem, page breaks are preset and the page
is set up to place your name on the second page automatically.

Place the proper account title in the cell where the word "ACCOUNT" appears on the template.

Place the amount in the cell where the word "AMOUNT" appears on the template. A formula may be
placed in some of these cells.

Write a formula into cells where the word "FORMULA" appears. In these cells, an amount calculated
can be entered. An amount can be placed in these cells.

Place the explanation for the entry in the cell where the word "EXPLANATION" appears on the
template.

Insert the account number where "ACCT #" appears on the template during posting.

Insert the journal reference where "JOURN #" appears on the template during posting.

Insert the title in the cell where "TITLE" appears on the template.

The print area is defined to fit onto 8 1/2" X 11" sheets in portrait or landscape mode as required.

The gray filled cells define the perimeter of the problem and the print area.
The problem is formatted for whole dollars with comma separations (no cents) except where required.

The display may have "Freeze Pane" invoked so column titles remain visible during data entry.

Negative values should be entered as -400 and will be shown as ($400) or (400) vice -$400 or -400.
es as required.




he pages as required.
Name:
Course:
Date:
Exercise E4-11 – Compute overhead rates and assign overhead using ABC.
Managerial Accounting, 4th Edition, by Weygandt, Kieso, and Kimmel
Solving Managerial Accounting Problems Using Microsoft Excel for Windows by Rex A Schildhouse

Exercise E4-11 Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April,
    50    range instruments and      300       pressure gauges were produced, and overhead costs of $89,500        were estimated. An analysis of
estimated overhead costs reveals the following activities.

                             Activity                              Cost Driver                                   Total Cost
                1       Material handling                       Number of requisitions                                  $35,000
                2       Machine setups                          Number of setups                                        $27,500
                3       Quality inspections                     Number of inspections                                   $27,000
                                                                                                                        $89,500

The cost driver volume for each product was as follows.
                           Cost Driver               Instruments                       Gauges                      Total
                     Number of requisitions              400                            600                        1,000
                     Number of setups                    200                            300                         500
                     Number of inspections               200                            400                         600

Instructions:
(a) Determine the overhead rate for each activity.

                                   Estimated                     Expected Use of Cost                         Activity-based
           Activity Cost Pools                          ÷                                        =
                                   Overhead                      Drivers per Activity                         Overhead Rates
          Label                         Value           ÷               Value                    =                Value
          Label                         Value           ÷               Value                    =                Value
          Label                         Value           ÷               Value                    =                Value

(b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.

                                                        Instruments                  Gauges
                      Cost Driver                                                                              Cost Assigned
                                                     Number       Cost         Number       Cost
          Label                         Value          Amount     Formula       Amount       Formula               Formula/Value
          Label                         Value          Amount     Formula       Amount       Formula               Formula/Value
          Label                         Value          Amount     Formula       Amount       Formula               Formula/Value
          Total costs                                             Formula                    Formula               Formula/Value
          Units produced                                          Amount                     Amount
          Overhead cost per unit                                  Formula                    Formula

(c) Write a memorandum to the president of Fontillas Instrument explaining the benefits of activity-based costing. (Enter your answer in the block below.)

Memorandum
To: President, Fontillas Instrument, Inc.
From:
Re: Benefits of activity-based costing (ABC)




                                    FileName: f4fe8927-4e45-4a6e-93ff-657d4db8ee7f.xls, Tab: Exercise E4-11, Page 4 of 4, 6/17/2011, 7:18 PM

				
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