Student Name Instructions: You must complete this in Excel and submit the file i
ID: 2338133 • Letter: S
Question
Student Name Instructions: You must complete this in Excel and submit the file in Canvas. Do NOT use Apple "Numbers". The yellow cells are to be completed with formulas only. A formula could be as simple as an "-" to bring a number from another cell. When you are done, copy the worksheet to a new tab and click on "Formulas" and then "Show Formulas". Save the file with your name as part of the title. Saucy Saucers Saucy makes 3 different products: a drone, a flying saucer plastic model (model), and an actual flying saucer drone (flyer) Units Produced Drone Saucer Flyer Model 10,000 2,000 50,000 62,000 The company uses a single factory overhead rate for allocating overhead costs to products based on direct labor hours. The total budgeted factory overhead is: Department Production Supervision & Janitorial Total Overhead Costs $ 1,225,000 $ 175,000 $ 1,400,000Explanation / Answer
Traditional Costing Using Predetermined OH Rates A Determine the predetermined Overhead rate and allocate the cost to each product and cost per unit Predetermined OH Rate Cost $1,400,000 Cost Driver 175000 Direct Labour Hours Predetermined OH Rate $8 Cost/Cost Driver -DLH Predetermined OH rate allocation to Products & Per Unit Drone Saucer Flyer Model Total Cost Driver -DLH 25000 10000 140000 175000 Rate $8 $8 $8 Total Cost per product Cost Driver -DLH* Rate $200,000 $80,000 $1,120,000 $1,400,000 Units Produced 10000 2000 50000 Cost per unit Total Cost per product/Units Produced $20 $40 $22 B Using ABC determine the activity rate per cost pool Supervision and Janitorial Set Ups Production Orders Quality Control Storeroom Support 1 Cost $175,000 $428,750 $245,000 $183,750 $367,500 2 Cost Driver 175000 125 125 75 750 3 DLH Set ups Prod Order QC Storeroom Support 4 Rate $1 $3,430 $1,960 $2,450 $490 1/2 ABC Allocation to Products Drone Saucer Flyer Model Supervision and janitorial 25000*$1 10000*$1 140000*$1 $25,000 $10,000 $140,000 Set Ups 80*$3430 40$3430 5*$3430 $274,400 $137,200 $17,150 Production Order 80*$1960 40*$1960 5*$1960 $156,800 $78,400 $9,800 Quality Control 35*$2450 40*$2450 0*$2450 $85,750 $98,000 $0 Storeroom Support 320*$490 400*$490 30*$490 $156,800 $196,000 $14,700 $698,750 $519,600 $181,650 Units Produced 10,000 2,000 50,000 Cost per Unit $70 $260 $4 rounded off Compare OH Cost per unit under traditional VS ABC SP/unit Traditional Cost/Unit ABC cost/unit Difference Drone $55 $20 $70 $50 Saucer Flyer $150 $40 $260 $220 Model $15 $22 $4 ($18) In all the cases the SP /unit is very less in case of ABC method compared to traditional method . But ABC methodology alloacted costs based on the value and non value cost method which involves the material handling,Production Order all those things which should be controlled in the organisation compared to traditional method which only allocated based on a predtermined rate which may involve in a larger part of overhead beinng allocated to a particular product which will be wrong.Inthis scenario only in the case of Model the cost as per ABC is lower and it will result in profit for the particular segement.