Question :
53.Cleveland Company manufactures two products, Product A-33 and Product C-17. : 1236283
53.Cleveland Company manufactures two products, Product A-33 and Product C-17. Product C-17 is the more complex of the two products, requiring 1.5 hours of direct labor per unit to manufacture compared to 1.0 hour of direct labor time for Product A-33. Product C-17 is produced on an automated production line. The company estimated it would incur $510,000 in manufacturing overhead costs and produce 10,000 units of Product C-17 and 40,000 units of Product A-33 during the current year. Unit costs for materials and labor are:
Product A-33Product C-17
Direct material$13$21
Direct labor$6$9
Required: The company is considering the use of activity-based costing as an alternative to its current traditional costing method for manufacturing overhead. Data relating to the company’s activity cost pools for the current year are given below:
Activity cost poolTotal costProduct A-33Product C-17Total
Machine setups required$253,0008001,6002,400
Purchase orders issued72,500500100600
Machine-hours required184,5007,00010,50017,500
Total$510,000
Using the data above, determine the unit product cost of Product A-33 for the current year.
The activity rates for each activity cost pool are as follows:54.Bangor Company manufactures two products, Product F and Product G. The company expects to produce and sell 1,400 units of Product F and 1,800 units of Product G during the current year. The company uses activity-based costing to compute unit product costs for external reports. Data relating to the company’s three activity cost pools are given below for the current year:
Total Activity
Activity Cost PoolTotal CostProduct FProduct GTotal
Machine setups$10,80080 setups100 setups180 setups
Purchases orders77,520510 orders1,010 orders1,520 orders
General Factory$75,9202,240 hours3,600 hours5,840 hours
Required: Using the activity-based costing approach, determine the overhead cost per unit for each product.
The activity rates for each activity cost pool are computed as follows:
Machine setups$10,800180 setups$60.00 per setup
Purchase orders$77,5201,520 orders$51.00 per order
General factory$75,9205,840 hours$13.00 per hour
The overhead cost charged to Product F is:
Activity RateActivityABC Cost
Machine setups$60.00/setup80 setups$4,800
Purchase orders$51.00/order510 orders26,010
General factory$13.00/hour2,240 hours29,120
Total overhead cost$59,930
Fill in the Blank Questions
55.Melbourne Resources provides the following data to enable you to calculate overhead rates: Machining Department Overhead is $15,000, which is to be allocated on estimated machine hours of 25,000. The rate per Machine Hour would be ___________________. If Machining cost is to be allocated to three jobs which consumed A = 3,000 hours, B = 4,000 hours, and C = 1,000 hours respectively; then Job A should be charged _______________; Job B should be charged _______________; and Job C _______________.
56.A _________________ is a factor that causes the cost of an activity to go up and down.
57.An activity __________________ is a temporary account accumulating the costs a company incurs to support an identified set of activities.
58.Under traditional cost allocation methods, low-volume complex products are often ________________ and high-volume simpler products are likely to be ________________.
