**Please show all parts*** Activity-Based Costing The president of H&Y; Company
ID: 342106 • Letter: #
Question
**Please show all parts***
Activity-Based Costing The president of H&Y; Company has been concerned about the profitability of the company product lines First, she wants you to examine the current situation using traditional approach of allocating overhead Second, she wants you to apply Activity-Based Costing (ABC) to develop a new product cost for each product line. Third, she wants your opinion about the best approach to use to determine the products' unit cost. Revenue: The expected level of sales is 200 units of each product. Product A selling price per unit Product B selling price per unit $12,000 $19,000 Costs: The expected level of production is 200 units of each product. $5,400 $8,370 1. Direct Material cost per unit Product A Direct Material cost per unit Product B $340 $700 2. Direct Labor cost per unit Product A Direct Labor cost per unit Product B 3. Factory Overhead Activities: a. Every product is inspected b. Product A moving parts oiled: 5 parts per unit 3 parts per unit Product B moving parts oiled: c. Material is delivered to each of the product lines on a daily basis Product A ProductB 5 times per week 5 times per week 5 hours per week 20 hours per week d. Product A redesign: Product B redesign: 5 times per week 2 times per month e. Product A supplier purchase orders: Product B supplier purchase orders: f. Facility administration is based on direct labor costs Total Estimated Annual Activity Cost Estimated Cost $93,000 $5,700 $12,200 $121,000 $48,000 $32,100 312,000 Activity Cost Driver # units # oil applications # deliveries # redesign hours # purchase orders direct labor cost ($) Inspection Lubricating oil Material handling | Product design Purchase orders Facility Administration Total factory overhead 43Explanation / Answer
Note: c. is incorrect hence re-done.
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Per Chegg guidelines, 4 sub-parts have been answered.
Activity Product A Product B Total Inspection 46500 46500 93000 Lubricating oil 3562 2138 5700 Material handling 6100 6100 12200 Product design 24200 96800 121000 Purchase orders 43944 4056 48000 Facility Administration 10494 21606 32100 Total 134800 177200 312000 Overhead per unit 674 886 ($134800/200) ($177200/200)Related Questions
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