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Question

platform/mod/quiz/attempt.php?attempt 18633408page 6 Text book BannerWeb Coblesk Email Co ssCourse Email CobleskillNBT Bank AOL Mail H Herkimer Colle Menu Traditional Product Costing Versus Activity-Based Costing Assum for one of its plants to be $216.000, consisting of the following activity cost pools for the current month: e that Panasonic Company has determined its estimated total manufacturing overhead cost Activity Centers Assembly setups Materials handling Activity Costs Cost Drivers Activity Level 1,500 300 2,000 1,200 $51,000 Setup hours Assembly Maintenance Total 21,000 Number of moves 20,000 Assembly hours 24000 Maintenance hours 216,000 Total direct labor hours used during the month were 8.000. Panasonic produces many different electronic products, including the following two products produced during the current month Model X301 Model Z205 1,000 1,000 Units praduced Direct materials costs$21,000$21.000 Direct lebar costs Direct labor hours Setup hours Materials moves Assembly hours 18,500$18,500 500 50 25 800 500 50 800

Explanation / Answer

Answer a. Traditional Costing Predetermined Overhead Rate = $216,000 (Total Overhead) / 8,000 hrs (direct Labor hrs) Predetermined Overhead Rate = $27.00 per direct labor hr. Model X301   Model Z205 Direct Material                  21,000                           21,000 Direct Labor                  18,500                           18,500 Overhead: Model X301 - 500 hrs X $27                  13,500 Model Z205 - 500 hrs X $27                           13,500 Total Cost                  53,000                           53,000 No. of Units Produced                    1,000                             1,000 Overhead Cost Per Unit                    53.00                             53.00 Answer b. ABC Costing Activity Overhead Cost Driver Quantity Allocation Rate Assembly Setups                  51,000                             1,500 Setup hrs                   34.00 per Setup hr Materials Handling                  21,000                                 300 moves                   70.00 per move Assembly                120,000                           12,000 Assembly hrs                   10.00 per Assembly hr Maintenance                  24,000                             1,200 Maint. Hrs                   20.00 per Maint. Hr Total                216,000 Assigning Overhead Cost to Product Model Using ABC Method Activity Based Overhead Rate Model X301 Model Z205 Cost Driver Incurred OH Allocated Cost Driver Incurred OH Allocated Assembly Setups                    34.00 per Setup hr                             50 Setup hrs                      1,700            100 Setup hrs                   3,400 Materials Handling                    70.00 per move                             25 moves                      1,750               50 moves                   3,500 Assembly                    10.00 per Assembly hr                          800 Assembly hrs                      8,000            800 Assembly hrs                   8,000 Maintenance                    20.00 per Maint. Hr                             10 Maint. Hrs                         200               40 Maint. Hrs                      800 Total Overhead Cost                   11,650                15,700 Model X301 Model Z205 Direct Material                  21,000                           21,000 Direct Labor                  18,500                           18,500 Ovrehead Costs: Assembly Setups              1,700.00                       3,400.00 Materials Handling              1,750.00                       3,500.00 Assembly              8,000.00                       8,000.00 Maintenance                  200.00                           800.00 Total            51,150.00                     55,200.00 No. of Units Produced                    1,000                             1,000 Overhead Cost Per Unit                    51.15                             55.20

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