Problem 18-2 Activity-Based Costing Printware Products, Inc. produces printers f
ID: 2580539 • Letter: P
Question
Problem 18-2 Activity-Based Costing Printware Products, Inc. produces printers for wholesale distributors. It has just completed packaging an order from Hawes Company for 450 printers. Before the order is shipped, the controller wants to compare the unit costs computed under the company's new activity-based costing system with the unit costs computed under its traditional costing system. Printware's traditional costing system assigned overhead costs at a rate of 240 percent of direct labor cost. Data for the Hawes order are as follows: direct materials, $17,552; purchased parts, $14,856; direct labor hours, 140; and average direct labor pay rate per hour, $17 Data for activity-based costing related to processing direct materials and purchased parts for the Hawes order follow Activity Engineering systems design Engineering hours Setup Parts production Product assembly Packaging Building occupancy Required If required, round the per unit answers to the nearest cent. 1. Use the traditional costing approach to compute the total cost and the product unit cost of the Hawes order Total cost Product unit cost Cost Driver Number of setups Machine hours Assembly hours Number of packages 5.60 per package Machine hours Activity Cost Rate $ 28 per engineering hour $ 36 per setup $ 37 per machine hour s 42 per assembly hour Activity Usage 18 engineering hours 12 setups 82 machine hours 96 assembly hours 150 packages 82 machine hours s 10 per machine hourExplanation / Answer
ABC METHOD
$
$
DIRECT MATERIALS
17552
PURCHASED MATERIALS
14856
DIRECT LABOUR
140 Hrs
X$17
2380
ACTIVITY COSTS
9662
TOTAL
44450
COST PER PRINTER
44450/450
$98.78
TRADITIONAL METHOD
$
$
DIRECT MATERIALS
17552
PURCHASED MATERIALS
14856
DIRECT LABOUR
140 hrs
X$17
2380
ASSIGNED OVERHEAD COSTS
$2380
@240%
5712
TOTAL
40500
COST PER PRINTER
$40500/450
$90
ACTIVITY BASED
ACTIVITY COST RATE
$
ACTIVITY
COST DRIVER
$
ACTIVITY COST
PARTS PRODUCTION
37
82 hrs
3034
PROC ASSEMBLY
42
96 hrs
4032
PACKAGING
5.6
150 packages
840
SETUP
36
12 set ups
432
ENGINEERING
28
18 eng hrs
504
BUILDING OCCUPANCY
10
82 machine hrs
820
total
$9662
ABC METHOD
$
$
DIRECT MATERIALS
17552
PURCHASED MATERIALS
14856
DIRECT LABOUR
140 Hrs
X$17
2380
ACTIVITY COSTS
9662
TOTAL
44450
COST PER PRINTER
44450/450
$98.78