Which of the following statements are true? (You may select more than one answer

Question

Which of the following statements are true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

  

What is the ABC unit product cost for the Deluxe model after this change? (Round your intermediate calculations and final answer to 2 decimal places.)

  

      

Which of the following statements are true concerning the effects of the change in production orders on the ABC unit product costs? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

     

(b)

Which of the following statements are true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

   The traditional unit product costs for the two models are unchanged by the change in production orders because traditional overhead allocations based on direct labor-hours ignore other cost drivers such as production orders. The traditional unit product costs for the two models are unchanged by the change in production orders because neither the total estimated overhead cost nor the total direct labor-hours were affected. The traditional unit product costs for the two models have been changed by the change in production orders because traditional overhead allocations based on direct labor-hours ignore other cost drivers such as production orders. Change the direct labor-hour requirement for the Deluxe model back to 5 hours in cell B10. Assume that the production orders change so that the Deluxe model Will have 290 orders in cell C19 and the Tourist model will have 210 orders in cell D19. The Data area should now look like this 8 Annual sales in units 9 Direct materials per unit 10 Direct labor-hours per unit Deluxe Tourist 2,000 10,000 $17 4 $25 $12 per DLH 12 Direct labor rate 13 Estimated Overhead 15 16 Activities and Activity Measures 17 Labor related (direct labor-hours)$ 80,000 18 Machine setups (setups) 19 Production orders (orders) 20 General factory (machine-hours)250,000 21 72 Expected Activi Cost Deluxe TouristTotal 50,000 150,000 3,000 2,000 5,000 70,000 290 210 500 40,000 10,000 40,000 12,000 28,000 550,000 (a) What is the traditional unit product cost for the Deluxe model after this change? Traditional unit product cost for the Deluxe model

Explanation / Answer

(a) Calculation of Direct Labour Hours required

Deluxe 2000 units*5hrs = 10000

Tourist 10000 units*4 hrs = 40000

total hours = 50000 Hours

Total Cost = 55000

Cost Per DLH = 550000/50000 = 11 per DLH

Cost of Deluxe per product

Direct Material 25

Direct Labour 60 (12*5hrs)

Allocation cost 55 (11*5hrs)

Total Cost 140

(b) a & b statement are true because total overhead cost & direct labour hour remain unchanged.

(c)

Basis Cost Total Activity Rate Labour Related DLH 80000 50000 1.6 Machine Setup set up 150000 5000 30 Production Order order 70000 500 140 General Factory Machine hours 250000 40000 6.25 550000 Deluxe No of activity Rate Amount Labour Related 10000 1.6 16000 Machine Setup 3000 30 90000 Production Order 290 140 40600 General Factory 12000 6.25 75000 221600 No. of Units 2000 Overhead cost per unit 110.8 Material 25 Labour 60 Overhead 110.8 Cost as per ABC 195.8 (d) option (b) is the correct answer

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

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