Perdon Corporation manufactures safes—large mobile safes, and large walk-in stat
ID: 2398822 • Letter: P
Question
Perdon Corporation manufactures safes—large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead.
Mobile Safes
Walk-in Safes
The total estimated manufacturing overhead was $279,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.)
per unit
The total estimated manufacturing overhead of $279,000 was comprised of $173,000 for materials handling costs and $106,000 for purchasing activity costs. Under activity-based costing (ABC): (Round intermediate computations and final answers to 2 decimal places, e.g. 12.25.)
What amount of purchasing activity costs are assigned to:
per unit
Compare the amount of overhead allocated to one mobile safe and to one walk-in safe under the traditional costing approach versus under ABC. (Round answers to 2 decimal places, e.g. 12.25.)
Traditional Costing
Activity-Based Costing
$
1,690
Mobile Safes
Walk-in Safes
Units planned for production 200 60 Material moves per product line 290 250 Purchase orders per product line 450 350 Direct labor hours per product line 800 Your answer is correct.The total estimated manufacturing overhead was $279,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.)
(1) One mobile safe $ per unit (2) One walk-in safe $ per unit The total estimated manufacturing overhead of $279,000 was comprised of $173,000 for materials handling costs and $106,000 for purchasing activity costs. Under activity-based costing (ABC): (Round intermediate computations and final answers to 2 decimal places, e.g. 12.25.)What amount of materials handling costs are assigned to:
(a) One mobile safe $ per unit (b) One walk-in safe $
per unit
The total estimated manufacturing overhead of $279,000 was comprised of $173,000 for materials handling costs and $106,000 for purchasing activity costs. Under activity-based costing (ABC): (Round intermediate computations and final answers to 2 decimal places, e.g. 12.25.)
What amount of purchasing activity costs are assigned to:
per unit
Compare the amount of overhead allocated to one mobile safe and to one walk-in safe under the traditional costing approach versus under ABC. (Round answers to 2 decimal places, e.g. 12.25.)
Traditional Costing
Activity-Based Costing
Mobile safe $ $ Walk-in safe $$
1,690
Explanation / Answer
Ans 1 in $ One mobile safe 448.20 per unit (112.05*800)/200 units One walk-in safe 3156.08 per unit (112.05*1690)/60 units Predetermined overhead rate 279000/(800+1690) 112.05 ans 2 One mobile safe 464.54 per unit (290*320.37)/200 One walk-in safe 1334.88 per unit (250*320.37)/60 Material handling cost 320.37 per move 173000/(290+250) moves ans 3 One mobile safe 298.13 per unit (132.5*450)/200 One walk-in safe 772.92 per unit (132.5*350)/60 Purcahsing activity cost 132.50 106000/(450+350) ans 4 Traditional ABC Mobile safe 448.20 762.67 (464.54+298.13) One walk-in safe 3156.08 2107.8 (772.92+1334.88) If any doubt please comment
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