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Hambie furniture is considering updating their costing system. The company’s cos

ID: 2558866 • Letter: H

Question

Hambie furniture is considering updating their costing system. The company’s cost accountant has identified three overhead pools along with appropriate drivers for each pool.

Activity pool    costs Activity drivers

Utilities          520,000           80,000 machine hours

Scheduling and setup 651,000   700 setups

Material handling 2,080,000    2,600,000 pounds of material

The company manufactures three models of tables listed below along with plans for the current years production

                                             oval          round            Square

Direct costs (material and labor) 80,000         80,000          80,000

Total machine hours                    40,000        15,000           25,000

Total number of setups                   90             310                 300

Total pounds of material                812,500         650,000            1,137,500

Number of units products             5000               2000                 7000

Number of units sold                   4,500                 2,000             5,800

Compute the total cost and the unit cost for each model?

Compute the cost of ending inventory to the year?

Explanation / Answer

Compute the total cost and the unit cost for each model

2) Cost of ending inventory = (500*214.74+1200*204.50) = 352770

Oval Round Square Direct material and labour 80000 80000 80000 Utilities 260000 97500 162500 Scheduling and setup 83700 288300 279000 Material handling 650000 520000 910000 Total cost 1073700 985800 1431500 Production units 5000 2000 7000 Unit cost 214.74 492.90 204.50