Larner Corporation is a diversified manufacturer of industrial goods. The compan
ID: 2341896 • Letter: L
Question
Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity cost Pool Labor-related 5.00 per direct labor-hour Machine-related 4.00 per machine-hour Activity Rates Production orders Shipments General factory 100.00 per order 120.00 per shipment 4.00 per direct labor-hour Cost and activity data have been supplied for the following products: 378 B52 Direct materials cost per unit 3.50 $20.00 Dírect labor cost per unit Number of units produced per year 2,000 400 3.75 9.00 Total Expect Activity B52 40 20 378 Direct labor-hours 1,200 Machine-hours Machine setups Production orders Shipments 2,800 Required: Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers toExplanation / Answer
Solution:
First of all we need to allocate the overhead to each product.
Allocation of Overhead
Allocation of Overhead
J78
B52
Expected Usage of Activity
OH Rate
Assigned Overhead
Expected Usage
OH Rate
Assigned Overhead
Labor Related
1200
$5
$6,000
40
$5
$200
Machine related
2800
$4
$11,200
20
$4
$80
Machine Setup
7
$60
$420
4
$60
$240
Production Orders
7
$100
$700
4
$100
$400
Shipments
5
$120
$600
4
$120
$480
General Factory
1200
$4
$4,800
40
$4
$160
Total Allocated Overheads
$23,720
$1,560
Budgeted Production Units
2,000 Units
400 Units
Overhead Per Unit (Total Overhead Assigned / Units)
$11.86
$3.90
Now, we can calculate the Unit Product Cost for each product
J78
B52
Direct Materials cost per unit
$3.50
$20.00
Direct labor cost per unit
$3.75
$9.00
Allocated Overhead Per Unit
$11.86
$3.90
Unit Product Cost
$19.11
$32.90
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Allocation of Overhead
J78
B52
Expected Usage of Activity
OH Rate
Assigned Overhead
Expected Usage
OH Rate
Assigned Overhead
Labor Related
1200
$5
$6,000
40
$5
$200
Machine related
2800
$4
$11,200
20
$4
$80
Machine Setup
7
$60
$420
4
$60
$240
Production Orders
7
$100
$700
4
$100
$400
Shipments
5
$120
$600
4
$120
$480
General Factory
1200
$4
$4,800
40
$4
$160
Total Allocated Overheads
$23,720
$1,560
Budgeted Production Units
2,000 Units
400 Units
Overhead Per Unit (Total Overhead Assigned / Units)
$11.86
$3.90
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