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ID ezto.mheducation com Accounting web Slice Gallery sites Buggérés 99 Names of A. tericOnline AClive NelsonBrain My Home login aro Windows H streaming Personnaliser les liens Google BMO Bank ot line Banking Apple Bing Aplia Yahoo >> Chapter 5 Quiz for Marks (15%) Products And Uses A Chegg.com Products Ard Uses A Chegg.com Products And Uses A Harrison Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labour-hours. Data for the two products for the upcoming year follow: Parcel Rascon Direct materials cost per unit 29.40 23.20 Direct labour cost per unit Direct labour-hours per unit Number of units produced $27.90 4.40 40 90 30,000 121,000 These products are customized to some degree for specific customers. Required: 1. The company's manufacturing overhead costs for the year are expected to be $861,000. Using the company's traditional costing system, compute the unit product costs for the two products. (Round intermediate calculations and round your final answers to 2 decimal places.) Rascon Parcel Unit product cost 2. Management is considering an ABC system in which half of the overhead would continue to be allocated on the basis of direct labour-hours and half would be allocated on the basis of engineering design time This time is expected to be distributed as follows during the upcoming year Rascon Parcel Total Engineering design time (in hours) 5,800 2,900 8,700 Compute the unit product costs for the two products using the proposed ABC system. (Round intermediate calculations and round your final answers to 2 decimal places.) Rascon Parcel Unit product costExplanation / Answer
1. The unit product costs under the company's conventional costing system would be computed as follows:
Rascon
Parcel
Total
Number of units produced (a) .....................
30,000
121,000
Direct labor-hours per unit (b).....................
0.90
0.40
Total direct labor-hours (a) × (b).................
27,000
48,400
75,400
Total manufacturing overhead (a)................ $861,000
Total direct labor-hours (b) ......................... 75,400 DLHs Predetermined overhead rate (a) ÷ (b) ........ $ 11.42 per DLH
Direct materials ..........................................
Rascon
$29.40
Parcel
$23.20
Direct labor................................................
27.90
4.40
Manufacturing overhead applied:
0.90 DLH per unit × $11.42 per DLH .........
10.28
0.40 DLH per unit × $11.42 per DLH .........
4.57
Unit product cost........................................
$67.58
$32.17
2. The unit product costs with the proposed ABC system can be computed as follows:
Estimated
Activity Cost Pool
Overhead Cost*
(b) Expected Activity
(a) ÷ (b)
Activity Rate
Labor related ........... $430,500 75,400 direct labor-hours $5.71 per direct labor-hour
Engineering design... $430,500 8,700 engineering-hours $49.48 per engineering-hour
*The total overhead cost is split evenly between the two activity cost pools.
Rascon Parcel Expected Expected
Activity Amount Activity Amount
Labor related at $5.71 per direct labor-hour .............
27,000
$ 154,170
48,400
$276,364
Engineering design at $49.48 per engineering-hour ....
5,800
286,984
2,900
143,492
Total overhead cost assigned (a)...............................
$441,154
$419,856
Number of units produced (b) ...................................
30,000
121,000
Overhead cost per unit (a) ÷ (b ................................
$14.71
$3.47
The unit product costs combine direct materials, direct labor, and overhead costs:
Rascon Parcel
Direct materials ................................. $29.40 $23.20
Direct labor....................................... 27.90 4.40
Manufacturing overhead (see above) .. 14.71 3.47 Unit product cost............................... $72.01 $31.07
Rascon
Parcel
Total
Number of units produced (a) .....................
30,000
121,000
Direct labor-hours per unit (b).....................
0.90
0.40
Total direct labor-hours (a) × (b).................
27,000
48,400
75,400