Product-Costing Accuracy, Plantwide and Departmental Rates, ABC Escuha Company p

Question

Product-Costing Accuracy, Plantwide and Departmental Rates, ABC Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products Product-Related Data Scientific Business Units produced per year Prime costs Direct labor hours Machine hours Production runs Inspection hours Maintenance hours 77,000 $257,000 102,100 44,900 100 2,000 2,250 770,000 $2,570,000 1,021,000 449,000 150 3,000 9,000 Department Data Department 1 Department 2 Direct labor hours: 25,200 878,060 903,260 Scientific calculator 76,900 142,940 219,840 Business calculator Total Machine hours: 22,900 366,400 389,300 Scientific calculator 22,000 82,600 104,600 Business calculator Total ead

Explanation / Answer

1) Budgeted Overhead per labor hour :-

= Total Overhead / Total Labor Hours

= ($858000+$769500) / (219840+903260)

= $1627500 / 1123100

= $1.45 Per Labor Hour

2) a. Use Machine Hours for Department 1 and Direct Labor Hour for Department 2.

Dept. 1 = $858000 / 389300 = $2.20 per Machine Hour

Dept. 2 = $769500 / 903260 = $0.85 per labor hour

Overhead Cost per Unit :-

Scientific = (($2.20 * 22900)+($0.85 * 25200)) / 77000

= ($50380+$21420)/77000

= $0.93 per unit

Business = (($2.20 * 366400)+($0.85 * 878060)) / 770000

= ($806080+$746351)/770000

= $2.02 per Unit

b. Use Labor hour for Dept.1 and Machine Hour for Dept.2.

Dept. 1 = $858000 / 219840 = $3.90 per Labor Hour

Dept. 2 = $769500 / 104600 = $7.36 per Machine hour

Overhead Cost Per Unit :-

Scientific = (($3.90 * 76900)+($7.36 * 22000)) / 77000

= ($299910 + $161920)/77000

= $6 per unit

Business = (($3.90 * 142940)+($7.36 * 82600)) / 770000

= ($557466 + $607936) / 770000

= $1.51 per unit

3)

Activity Cost Driver Total Cost Scientific Business Set Up Cost No. of Production Run $462000 $184800 $277200 Inspection Cost Inspection Hours $340000 $136000 $204000 Power Machine Hours $398000 $36181.82 $361818.18 Maintenance Cost Maintenance Hours $427500 $85500 $342000 Total (A) 1627500 $442481.82 $1185018.18 No. of Units (B) 847000 77000 770000 Overhead Cost Per Unit (A/B) $5.75 $1.54

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.