To assist in both maintaining their current job-order costing system and evaluat
ID: 2563197 • Letter: T
Question
To assist in both maintaining their current job-order costing system and evaluating adopting an activity-based costing system, the following information has been gathered. Expected PER-UNIT information next year for each product line: Tablets Large Drones Small Drones Direct material Direct labor PER UNIT Direct labor PER HOUR Machine hours- PER UNIT 250 $52 $26 115 $39 $100 $26 $26 Expected volume (demand) for each product line next year: Tablets Large Drones Small Drones Annual unit sales 50,000 100,000 20,000 40,000 Expected MANUFACTURING OVERHEAD for next year Cost Pool Machine setups Aluminum coloring Production orders Material Receipts Parts administration Product design Facility security $1,000,000 $700,000 $600,000 $200,000 $200,000 $400,000 $700,000 $400,000 $4,200,000 #Parts MH Beaver Frames has been using DIRECT LABOR HOURS as their allocation base for job-order costing. Expected ACTIVITY for next year Tablet Small Drone Machine setups 180 100 300 30 60 16 1 Calculate the single predetermined overhead rate. 2) Calculate the total unit product cost for each product line using job-order costing. 3) Calculate the selling price per unit of each product using job-order costing and a 40% markup on cost. 4) Calculate the activity rate for each activity used in activity-based costing. 5) Calculate the total amount of manufacturing overhead allocated to each product line. 6) Calculate the total unit product cost per unit for each product line using activity-based costing. 7) Compare the total unit product cost per unit of each product line calculated using the job-order costing method and the activity-based costing method and calculate the difference. 8) Compare the selling price per unit of each product line and calculat the difference.Explanation / Answer
As per policy, only four parts of a question is allowed to answer, so answering 1 - 4,
1) Single predetermined overhead rate :
Expected Manufacturing Overhead for next year = $4200000
Pre-determined overhead = $4200000/320000 = $13.125 per DL hr.
2) Total Unit product cost for each product line using job-order costing :
3) The selling price per unit of each product using job-order costing and a 40% markup =
4) The activity rate for each activity used in ABC :
Activity
Measure
Next year’s Pool cost (A)
Total expected activity next year (B)
Activity rate $ (A/B)
Labor related
DLH
1000000
320000
3.125
Machine setups
setups
700000
190+180+300+240=610
1147.54
Aluminum coloring
ORDERS
600000
100+160+65+90=415
1445.78
Production Orders
orders
200000
100+160+65+90=415
481.93
Material Receipts
Receipts
200000
340+300+220+180=1040
193.31
Parts administration
Parts
400000
60+30+16+10=116
3448.27
Product design
Products
700000
50000+100000+20000+40000=210000
3.33
Facility security
Mh
400000
50000*6+100000*4+20000*7+40000*3=960000
0.42
Product line DL/UNIT DL rate/hr. Number of DL Hours Next year's Units sale Number of DL Hours requied Laptops 52 26 2 50000 100000 Tablets 39 26 1.5 100000 150000 Large Droves 39 26 1.5 20000 30000 Small Droves 26 26 1 40000 40000 Total 320000Related Questions
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