Use the following information to answer questions 47-48 HiTech Products manufact
ID: 2570416 • Letter: U
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Use the following information to answer questions 47-48 HiTech Products manufactures three types of remote-control devicesE Standard, and Deluove. The company, which uses activity- bad five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. nxe The company, which uses activity-based costing, has identified s 225,000 2,475,000 840,000 170,000 Cost Driver Number of parts Number of parts Machine hours Direct labor hours Material handling Material insertion Finishing 7000 Orders shipped Packaging Total The following information pertains to the three product lines for next year Economy Standard Deluxe Units to be produced10,000 Orders to be shipped Number of parts per unit Machine hours per unit Labor hours per unit 500 2000 25 1,000 15 10 2 system, 2 47. Under an activity-based costing system, what is the per-unit cost of Standard? A. $164. B. $228. C. $272. D. $282. 48. Assume that HiTech is using a volume-based costing system. manufacturing costs are How much of the preceding cost would be assigned to Deluxeé A- S456471. B. $646,471. C. $961,176. D. $1,141,176. system, and the preceding applied to all products based on direct labor hours.Explanation / Answer
Per unit cost of Standard under activity based costing system
Activity
Cost
Material handling (75000 x 1)
$75,000
Material insertion (75000 x 11)
$825,000
Automated machinery (15000 x 24)
$360,000
Finishing (10000 x 5)
$50,000
Packing (500 x 100)
$50,000
Total Cost
$1,360,000
Cost per unit = $ 1360000/5000 units
= $ 272
Working notes:
Material handling cost per part = $ 225000/ 225000 parts
= $ 1 per part
Total number of parts = Number of unit x number of parts per unit
Total number of parts = (10000 x 10) + (5000 x 15) + (2000 x 25)
= 100000+75000+50000
= 225000
for economy, standard and deluxe
Material insertion cost per part = $ 2475000/ 225000 parts
= $ 11 per part
Automated Machinery cost per machine hour = $ 840000/ 35000 machine hours
= $ 24 per machine hour
Total machine hours = Number of unit x Machine hour per unit
Total machine hours = (10000 x 1) + (5000 x 3) + (2000 x 5)
= 10000 + 15000 + 10000
= 35000
for economy, standard and deluxe
Finishing cost per labor hour = $ 170000/ 34000 labor hour
= $ 5 per labor hour
Total labor hour = Number of units x Labor hour per unit
Total labor hour = (10000 x 2) + (5000 x 2) + (2000 x 2)
= 20000+10000+4000
= 34000
for economy, standard and deluxe
Packing cost per order = $ 170000/ 1700 orders
= $ 100 per order
Total orders = 1000+500+200
= 1700
for economy, standard and deluxe
Preceding cost for Deluxe using volume based accounting method
Total cost = $ 3880000
Total labor hours for economy, standard and deluxe = 34000
Cost per labor hour = $ 3880000 / 34000
= 114.1178 per Labor hour
Labor hour for deluxe = number of units x labor hour per unit
= 2000 x 2
= 4000
Preceding cost = $ 114.1178 x 4000 labor hours
= $ 456471
Per unit cost of Standard under activity based costing system
Activity
Cost
Material handling (75000 x 1)
$75,000
Material insertion (75000 x 11)
$825,000
Automated machinery (15000 x 24)
$360,000
Finishing (10000 x 5)
$50,000
Packing (500 x 100)
$50,000
Total Cost
$1,360,000
Cost per unit = $ 1360000/5000 units
= $ 272
Working notes:
Material handling cost per part = $ 225000/ 225000 parts
= $ 1 per part
Total number of parts = Number of unit x number of parts per unit
Total number of parts = (10000 x 10) + (5000 x 15) + (2000 x 25)
= 100000+75000+50000
= 225000
for economy, standard and deluxe
Material insertion cost per part = $ 2475000/ 225000 parts
= $ 11 per part
Automated Machinery cost per machine hour = $ 840000/ 35000 machine hours
= $ 24 per machine hour
Total machine hours = Number of unit x Machine hour per unit
Total machine hours = (10000 x 1) + (5000 x 3) + (2000 x 5)
= 10000 + 15000 + 10000
= 35000
for economy, standard and deluxe
Finishing cost per labor hour = $ 170000/ 34000 labor hour
= $ 5 per labor hour
Total labor hour = Number of units x Labor hour per unit
Total labor hour = (10000 x 2) + (5000 x 2) + (2000 x 2)
= 20000+10000+4000
= 34000
for economy, standard and deluxe
Packing cost per order = $ 170000/ 1700 orders
= $ 100 per order
Total orders = 1000+500+200
= 1700
for economy, standard and deluxe
Preceding cost for Deluxe using volume based accounting method
Total cost = $ 3880000
Total labor hours for economy, standard and deluxe = 34000
Cost per labor hour = $ 3880000 / 34000
= 114.1178 per Labor hour
Labor hour for deluxe = number of units x labor hour per unit
= 2000 x 2
= 4000
Preceding cost = $ 114.1178 x 4000 labor hours
= $ 456471
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