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 ________________.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more