Jaunkas Corp. manufactures mid-fi and hi-fi stereo receivers. The following data have been summarized:
Direct materials cost per unit $ 400 $ 1,800
Direct labor cost per unit 600 400
Indirect manufacturing cost per unit ? ?
Indirect manufacturing cost information includes the following:
$ 1,400 per setup
$ 700 per inspection hour
35 inspection hours
20 inspection hours
$ 13 per machine hour
1,900 machine hours
1,150 machine hours
The company plans to manufacture 125 units of the mid-fi receivers and 250 units of the hi-fi receivers. Calculate the product cost per unit for both products using activity-based costing.
Per unit indirect cost
For Mid-Fi: $796.8
For Hi-Fi: $317.4
Question: Refer to Exercise E19-24. The president of Western suspects that her allocation of indirect costs could be giving misleading results, so she decides to develop an ABCsystem. She identifies three activities: documentation preparation, information technologysupport, and training. She figures that documentation costs are driven by thenumber of pages, information technology support costs are driven by the number ofsoftware applications used, and training costs are driven by the number of direct laborhours worked. Estimates of the costs and quantities of the allocation bases follow:
Estimated quantity of allocation base
Information technology support
Direct labor hours
Total Indirect costs
Compute the predetermined overhead allocation rate for each activity. Round to thenearest dollar.
Rennie Plant Service completed a special landscaping job for Brenton Company. rennie uses ABC and has the following predetermined overhead allocation rates:
Allocation Base Overhead Allocation Rate
Designing Number of designs $ 290 per design
Planting Number of plants $ 20 per plant
The Rennie job included $1,500 in plants; $800 in direct labor; one design; and 30 plants.
2. If Brenton paid $3,690 for the job, what is the operating income or loss?
The following information is provided for Orbit Antenna Corp., which manufactures two products: Lo-Gain antennas and Hi-Gain antennas for use in remote areas.
Activity Cost Allocation Base
Setup $ 58,000 Number of setups
Machine maintenance 30,000 Number of machine hours
Total indirect manufacturing costs $ 88,000
Lo-Gain Hi-Gain Total
Direct labor hours 1,200 3,800 5,000
Number of setups 40 40 80
Number of machine hours 3,000 2,000 5,000
Orbit Antenna plans to produce 125 Lo-Gain antennas and 225 Hi-Gain antennas.
1. Compute the indirect manufacturing cost per unit using direct labor hours for the single plantwide predetermined overhead allocation rate.
Question: Refer to Exercises E19-24 and E19-25. Suppose Western’s direct labor rate was $280 per hour. The Halbert engagement used the following resources last month:
Allocation Base Halbert
Direct labor hours 170
Applications used 80
1. Compute the cost assigned to the Halbert engagement, using the ABC system.
2. Compute the operating income or loss from the Halbert engagement, using theABC system.
Darby Corp. is considering the use of activity-based costing. The following information is provided for the production of two product lines:
Activity Cost Allocation Base
Setup $ 105,000 Number of setups
Machine maintenance 60,000 Number of machine hours
Total indirect manufacturing costs $ 165,000
Product A Product B Total
Direct labor hours 7,000 5,000 12,000
Number of setups 30 170 200
Number of machine hours 1,600 2,400 4,000
Darby plans to produce 375 units of Product A and 250 units of Product B. Compute the ABC indirect manufacturing cost per unit for each product.
94% of StudySmarter users get better grades.Sign up for free