TAKE-HOME Siegel Corporation manufactures a product that is available in both a

Question

TAKE-HOME Siegel Corporation manufactures a product that is available in both a deluxe and regular model. Management estimated that $2,400,000 in overhead costs would be incurred and the company would produce 6,000 units of the deluxe model and 40,000 units of the regular model. The materials and labor costs per unit are as follows: Deluxe Regular $150 $112 Direct materials cost per unit.. Direct labor cost per unit.... .. $16 $8 The company uses activity-based costing to allocate overhead costs to its products. Four activity costs pools and their associated activities are as follows: Estimated Overhead Activity Cost Pool and Activity Measure Cost Purchase orders (number of orders) 100,000 Rework requests (number of requests 300,000 Product testing (number of tests) Machine-related (machine hours) 1400,000 30,000 hours Deluxe Regular 400 orders 600 orders 600 requests 900 requests 5,000 tests 10,000 tests 600,000 40,000 hours $2,400,000 Compute the activity rate for each Activity Cost Pool and the unit product cost for each model

Explanation / Answer

Activity rate Product orders 100 =100000/1000 Rework requests 200 =300000/1500 Product testing 40 =600000/15000 Machine related 20 =1400000/70000 Deluxe Regular Overhead: Product orders 40000 60000 Rework requests 120000 180000 Product testing 200000 400000 Machine related 600000 800000 Total Overhead 960000 1440000 Total units 6000 40000 Overhead cost per unit 160 36 Unit product cost: Direct materials 150 112 Direct labor 16 8 Overhead cost per unit 160 36 Unit product cost 326 156

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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