Walsh Company produces mathematical and financial calculators and operates at ca
ID: 2536528 • Letter: W
Question
Walsh Company produces mathematical and financial calculators and operates at capacity. Data related to the two products follows.
Total manufacturing overhead costs? are:
Total
Machining costs
$
440,000
Setup costs
110,000
Inspection costs
120,000
Requirements
1.
Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.
2.
Compute the manufacturing cost per unit for each product.
3.
How might Walsh managers use the new cost information from its?activity-based costing system to better manage its? business?
Total
Machining costs
$
440,000
Setup costs
110,000
Inspection costs
120,000
Data Table Mathematical Financial Annual production in units Direct materials cost Direct manufacturing labor cost Direct manufacturing labor-hours Machine-hours Number of production runs Inspection hours 50,000 75,000 $ 150,000 25,000 50,000 2,500 70,000 50 800 25,000 1,250 40,000 50 1,200 Print DoneExplanation / Answer
STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Machining Cost Machine hours 440,000 110,000 4 per MH Setup cost Production runs 110,000 100 1,100 per run Inspection cost Inspection hours 120,000 2,000 60 Per inspection hourss OH assigned to products: mathematical Financial Activity Rate Activity Oh cost Activity Oh cost Machining Cost 4 40000 160000 70000 280000 Setup cost 1100 50 55000 50 55000 Inspection cost 60 1200 72000 800 48000 287000 383000 Manufacturing cost per unit Mathematical Financial Material cost 75000 150000 Labour cost 25000 50000 OH cost 287000 383000 Total cost 387000 583000 Divide number of units 25000 50000 Mfg cost per unit 15.48 11.66 The manager will be able to use the information generated in a more relevant sense as the cost is more properly distributed. This is with the help of cost divided in to minute activities and cost is allocated on the basis of activities consumed by each products
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