Activity-Based Costing Required: 1. Compute the activity rate for each activity

Question

Activity-Based Costing Required: 1. Compute the activity rate for each activity cost pool. 2. Compute the company's predetermined overhead rate, assuming that the company uses plantwide predetermined overhead rate based on direct labor-hours. EXERCISE 3-3 Compute ABC Product Costs [LO3-3] Larner Corporation is a diversified manufacturer of industrial goods. The company' system contains the following six activity cost pools and activity rates: a single s activity-based costing Activity Cost Pool Labor-related.... Machine-related Machine setups Activity Rates $7.00 per direct labor-hour $3.00 per machine-hour $40.00 per setup $160.00 per order $120.00 per shipment General factory. .. $4.00 per direct labor-hour Cost and activity data have been supplied for the following products: 178 $6.50 $3.75 4,000 B52 Direct materials cost per unit....... Direct labor cost per unit. Number of units produced per year $31.00 $6.00 100 Total Expected Activity J78 1,000 B52 Direct labor-hours... Machine-hours 40 30 3,200 Shipments.... 10 Required: Compute the unit product cost of each product listed above. EXERCISE 3-4 Contrast ABC and Conventional Product Costs [LO3-4] Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H i expected to sell 40,000 units next year and Product L is expected to sell 8,000 units. A unit of either prod uct requires 0.4 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $1,632,000. Reauired

Explanation / Answer

Calculate unit product cost of each product :

J78 B52 Direct material 26000 3100 Direct labour 15000 600 Labour related activity 7000 280 Machine related activity 9600 90 Machine setup 200 40 Proudction order 800 160 shipments 1200 120 General factory 4000 160 Total production cost 63800 4550 Unit 4000 100 Unit product cost 15.95 45.50

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