Question 3 Ghaz Company produces two types of sound units: Deluxe and Regular. Activity data is as follows: Activity Usage Measures Units produced per year Prime cost Product-Costing Data Regular 50,000 Deluxe Total 5,000 55,000 RM39,000 5,000 10,000 10 RM369,000 RM408,000 Direct labor hours 45,000 50,000 100,000 15 Machines hours 90,000 Production runs 5 Number of moves 120 60 180 Activity Cost Data (Overhead Activities) Cost (RM) Activity driver Production runs Activity Setups Materials handling 60,000 30,000 Number of moves Power 50,000 Machines hours Direct labor hours Testing Total 40,000 180,000 Required: a) Calculate the consumption ratios for each activity. b) Choose group activity based on the consumption ratios. c) Calculate a rate for each pooled group of activities. d) Calculate unit product costs using the pool rates.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 3
Ghaz Company produces two types of sound units: Deluxe and Regular. Activity data is as
follows:
Activity Usage Measures
Units produced per year
Prime cost
Product-Costing Data
Deluxe
5,000
RM39,000
Regular
50,000
Total
55,000
RM408,000
RM369,000
Direct labor hours
Machines hours
5,000
45,000
50,000
10,000
90,000
100,000
Production runs
Number of moves
10
15
120
60
180
Activity Cost Data (Overhead Activities)
Activity
Cost (RM)
Activity driver
Production runs
Setups
Materials handling
Power
60,000
30,000
Number of moves
50,000
Machines hours
Testing
Total
40,000
Direct labor hours
180,000
Required:
a) Calculate the consumption ratios for each activity.
b) Choose group activity based on the consumption ratios.
c) Calculate a rate for each pooled group of activities.
d) Calculate unit product costs using the pool rates.
Transcribed Image Text:Question 3 Ghaz Company produces two types of sound units: Deluxe and Regular. Activity data is as follows: Activity Usage Measures Units produced per year Prime cost Product-Costing Data Deluxe 5,000 RM39,000 Regular 50,000 Total 55,000 RM408,000 RM369,000 Direct labor hours Machines hours 5,000 45,000 50,000 10,000 90,000 100,000 Production runs Number of moves 10 15 120 60 180 Activity Cost Data (Overhead Activities) Activity Cost (RM) Activity driver Production runs Setups Materials handling Power 60,000 30,000 Number of moves 50,000 Machines hours Testing Total 40,000 Direct labor hours 180,000 Required: a) Calculate the consumption ratios for each activity. b) Choose group activity based on the consumption ratios. c) Calculate a rate for each pooled group of activities. d) Calculate unit product costs using the pool rates.
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