Gibson Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Required Allocation Base Cost of material Number of setups Number of parts Inspection time. Number of orders. Labor Cost $ 1,190 1,080 Material Number of Number of Cost Parts 47 $ 5,600 7,500 28 Setups 31 11 Allocation Rate 2% of material cost $ 113.00 per setup $5.00 per part $ 1.30 per minute $ 12.00 per order Inspection Time 6,800 minutes 5,200 minutes. Number of Orders 67 22 a. Compute the cost per unit of laptop and desktop keyboards, assuming that Gibson made 210 units of each type of keyboard. Note: Round your answers to 2 decimal places.

Gibson Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Required Allocation Base Cost of material Number of setups Number of parts Inspection time. Number of orders. Labor Cost $ 1,190 1,080 Material Number of Number of Cost Parts 47 $ 5,600 7,500 28 Setups 31 11 Allocation Rate 2% of material cost $ 113.00 per setup $5.00 per part $ 1.30 per minute $ 12.00 per order Inspection Time 6,800 minutes 5,200 minutes. Number of Orders 67 22 a. Compute the cost per unit of laptop and desktop keyboards, assuming that Gibson made 210 units of each type of keyboard. Note: Round your answers to 2 decimal places.

Name: Gibson Manufacturing produces two keyboards, one for laptop computers
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Gibson Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The productionprocess is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. Theco

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter13: The Balanced Scorecard: Strategic-based Control

Section: Chapter Questions

Problem 26P

See similar textbooks

Similar questions

Reducir, Inc., produces two different types of hydraulic cylinders. Reducir produces a major subassembly for the cylinders in the Cutting and Welding Department. Other parts and the subassembly are then assembled in the Assembly Department. The activities, expected costs, and drivers associated with these two manufacturing processes are given below. Note: In the assembly process, the materials-handling activity is a function of product characteristics rather than batch activity. Other overhead activities, their costs, and drivers are listed below. Other production information concerning the two hydraulic cylinders is also provided: Required: 1. Using a plantwide rate based on machine hours, calculate the total overhead cost assigned to each product and the unit overhead cost. 2. Using activity rates, calculate the total overhead cost assigned to each product and the unit overhead cost. Comment on the accuracy of the plantwide rate. 3. Calculate the global consumption ratios. 4. Calculate the consumption ratios for welding and materials handling (Assembly) and show that two drivers, welding hours and number of parts, can be used to achieve the same ABC product costs calculated in Requirement 2. Explain the value of this simplification. 5. Calculate the consumption ratios for inspection and engineering, and show that the drivers for these two activities also duplicate the ABC product costs calculated in Requirement 2.
Warren Furniture produces three models of desk chairs: Basic, Ergo, and Exec. The cost system at the Warren production facility allocates overhead cost on the basis of direct labor hours. The company is considering updating its cost system to an activity-based costing system and is interested in understanding the effects. A study team composed of the production facility's finance and operations groups has identified three overhead cost pools along with appropriate cost drivers for each pool. Cost Pools Assembly Setup Quality assurance Costs $ 2,925,000 1,023,000 642,000 Activity Drivers Direct labor-hours Number of setups Number of tests The plans for production for the next year and the budgeted direct costs and activity by product line are as follows: Direct costs (material and labor) Basic $ 1,006,800 Direct labor-hours 25,200 Products Ergo $ 1,143,000 12,000 Exec $ 868,800 Machine-hours 29,200 17,200 Number of setups Number of tests Number of units produced 48 140 7,200 72 100…
Central Perk, LLC, a manufacturer of coffee beans, is considering switching its operations to an Activity Based Costing system. The following manufacturing overhead activities and cost drivers have been identified: Activity. Machine setup Machine assembly Product inspection Product movement General factory Cost Driver Number of machine setups Machine hours logged Inspection hours logged Number of moves Machine hours logged Based on the above descriptions, which of the following correctly pairs the activity with its appropriate cost level? O A. Product Inspection... batch level cost OB. Product Movement... facility level cost O C. Machine Assembly... unit level cost O D. General Factory... batch level cost O E. Machine Setup... unit level cost
Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs-the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Service Departments User Departments Info Systems Facilities Computer Program Consult Training Total Budgeted Overhead $ 50,000 $ 25,000 $ 75,000 $ 110,000 $ 85,000 $ 345,000 Info Systems (hrs.) 400 1,100 600 900 3,000 Facilities (Square feet) 200,000…
Rooney Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Labor Cost $ 1,250 1,140 Laptop keyboards Desktop keyboards Material Number of Number of Cost $ 6,100 7,000 Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Cost Per Unit Setups 28 10 Allocation Rate 1% of material cost $ 120.00 per setup $ 7.00 per part $ 1.20 per minute $ 8.00 per order Parts Inspection Time 7,100 minutes 4,900 minutes 46 29 Required a. Compute the cost per unit of laptop and desktop keyboards, assuming that Rooney…
Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs: the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Service Departments User Departments Info Systems Facilities Computer Program Consulting $ 50,000 $110,000 600 $25,000 400 $75,000 1,100 400,000 200,000 600,000 information systems are allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space. Required: Allocate the service…
Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe. Suppose that Schell has conducted further research into its overhead and potential cost drivers. As a result, the company has compiled the following detailed information, breaking total overhead into three activity pools: Activity Pools Material handling Quality control Machine maintenance Req 1 Cost Driver Number of moves Number of inspections Number of machine hours Req 2 and 3 Required: 1. Calculate the activity rates for each activity pool assuming Schell uses an ABC system. 2. Calculate the amount of overhead that Schell will assign to the Standard floor mat line. 3. Determine the amount of overhead Schell will assign to the Deluxe product line. Complete this question by entering your answers in the tabs below. Material Handling Quality Control Machine maintenance Cost Assigned to Pool Activity Rate $ 2,068.00 $ 8,640.00 $ 14,120.00 Calculate the activity rates for…
Rooney Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Required Labor Cost $ 1,190 1,080 Laptop keyboards Desktop keyboards Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Material Number of Number of Cost $6,000 7,000 Cost Per Unit Setups 26 13 Parts 46 25 Allocation Rate 1% of material cost $ 109.00 per setup $ 5.00 per part $ 1.30 per minute $10.00 per order Inspection Time 7,200 minutes 5,100 minutes Number of Orders 61 a. Compute the cost per unit of laptop and desktop keyboards,…
Rundle Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Required Labor Cost $ 1,310 1,200 Laptop keyboards Desktop keyboards Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Material Number of Number of Cost $ 6,300 7,600 Cost Per Unit Setups 29 13 Parts 49 26 Allocation Rate 3% of material cost $102.00 per setup $3.00 per part $ 1.60 per minute $9.00 per order Inspection Time 7,400 minutes 4,800 minutes a. Compute the cost per unit of laptop and desktop keyboards, assuming that Rundle made…
Assume that a company has recently switched to JIT manufacturing. Each manufacturing cell produces a single product or major subassembly. Cell workers have been trained to perform a variety of tasks. Additionally, many services have been decentralized. Costs are assigned to products using direct tracing, driver tracing, and allocation. For each cost listed, indicate the most likely product cost assignment method used before JIT and after JIT. Set up a table with three columns: Cost Item, Before JIT, and After JIT. You may assume that direct tracing is used whenever possible, followed by driver tracing, with allocation being the method of last resort. Inspection costs Power to heat, light, and cool plant Minor repairs on production equipment Salary of production supervisor (department/cell) Oil to lubricate machinery Salary of plant supervisor Costs to set up machinery Salaries of janitors Power to operate production equipment Taxes on plant and equipment Depreciation on production…
Perez Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because of these product differences, the company wants to use activity-based costing to allocate overhead costs. It has identified four activity pools. Relevant information follows: b. Determine the overhead cost allocated to each product.
LogicCO is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectable before inspection of finished goods. Spoiled units are disposed of at zero net disposal value. uses the FIFO method of process costing. Summary data and weighted-average data for are as follows: Requirements : 1. For each cost category, compute equivalent units. Show physical units in the first column. 2. Summarize total costs to account for; calculate cost per equivalent unit for each cost category; and assign costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work in process. 3. Should 's managers choose the weighted-average method or the FIFO method? Explain.