After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility,Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups.He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability.He plans to produce 111,000 units of the Sport model and 45,500 units of the Pro model in the first quarter. He believes that with hismore efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by 24 percent.Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing FacilityCost Driver VolumeSportActivityAssembly bulldingAssemblingSetting up machinesHandling materialPackaging buildingInspecting and packingShippingCost DriverProTotalMachine-hoursSetup hoursProduction runs7,10031,1005105138,200561511970Direct labor-hours64,40011125,00022289,400333Number of shipmentsThird Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing FacilityesSportProDirect materialDirect laborAssenblyPackagingTotal direct laborDirect costs$1,511,000$2,422,00e$ 761,000$ 622,0001,001,000$1,762,000$3,273,000382,000$1,004, 000$3,426,000OverheadAssenbly buildingAssembling (e $30 per H)Setting up machine (e s900 per setup hour)Handling material (e $3,000 per run)Packaging buildingInspecting and packing (e $5 per direct labor-hour)Shipping (e $1,320 per shipnent)Total ABC averhead$ 213,00045,90057,000$933,000459,000153,000322,000146,520S 784,420$4,057,420125,000293,040$1,963,040Total ABC cost$5,389,040Number of unitsUnit cost111,00045,500118.4436.55Required:a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activity-based costingAssume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume the cost ofa setup hour remains at $900.Total ABCOverheadModelSportPro

Name: After reviewing the new activity-based costing system that Nancy Chen
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility,Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on mach

Set up hours for S=Set up hours-Reduction percent=51-51×24%=38.76 Set up hours for P=Set up…

Business

Accounting

After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility. Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability. He plans to produce 111,000 units of the Sport model and 45,500 units of the Pro model in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by 24 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Cost Driver Volume Activity Assembly bullding Assenbling Setting up machines Handling material Cost Driver Sport Pro Total Machine-hours Setup hours Production runs 7,100 38,200 561 31,100 51 19 51 70 Packaging building Inspecting and packing Shipping Direct labor-hours Number of shipments 64,400 25,0ee 222 89,400 333 111 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport $1,511,000 Pro Direct material Direct labor Assenbly Packaging Total direct labor Direct costs $2,422,000 $ 761,000 $ 622,000 382,000 $1,804,000 $3,426,000 1,e01, eee $1,762,000 $3,273,000 Overhead Assenbly building Assenbling ( $30 per ) Setting up machine (e s900 per setup hour) Handling material ( S3,000 per run) Packaging bullding Inspecting and packing (e ss per direct labor-hour) Shipping ( S1,320 per shipment) Total ABC overhead $ 213,000 45,900 57,000 $ 993,000 459,000 153,000 322,000 146,520 S784,420 $4,057,420 125,000 293,040 $1,963,040 Total ABC cost $5,389,040 Number of units Unit cost 111,000 36.55 45,500 118.44 Required: a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activity-based costing Assume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume the cost of a setup hour remains at $900 Total ABC Overhead Model Sport Pro

After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility. Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability. He plans to produce 111,000 units of the Sport model and 45,500 units of the Pro model in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by 24 percent. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Cost Driver Volume Activity Assembly bullding Assenbling Setting up machines Handling material Cost Driver Sport Pro Total Machine-hours Setup hours Production runs 7,100 38,200 561 31,100 51 19 51 70 Packaging building Inspecting and packing Shipping Direct labor-hours Number of shipments 64,400 25,0ee 222 89,400 333 111 Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport $1,511,000 Pro Direct material Direct labor Assenbly Packaging Total direct labor Direct costs $2,422,000 $ 761,000 $ 622,000 382,000 $1,804,000 $3,426,000 1,e01, eee $1,762,000 $3,273,000 Overhead Assenbly building Assenbling ( $30 per ) Setting up machine (e s900 per setup hour) Handling material ( S3,000 per run) Packaging bullding Inspecting and packing (e ss per direct labor-hour) Shipping ( S1,320 per shipment) Total ABC overhead $ 213,000 45,900 57,000 $ 993,000 459,000 153,000 322,000 146,520 S784,420 $4,057,420 125,000 293,040 $1,963,040 Total ABC cost $5,389,040 Number of units Unit cost 111,000 36.55 45,500 118.44 Required: a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activity-based costing Assume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume the cost of a setup hour remains at $900 Total ABC Overhead Model Sport Pro

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 26E: Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other...

See similar textbooks