s Zachary Electronics produces video games in three market categories: commercial, home, and miniature. Zachary has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Total Pooled Cost $ 436,000 251,400 Direct materials cost Direct labor cost Number of labor hours 124,600 319,000 Additional data for each of the product lines follow: Number of machine hours Number of production orders Required Research and development time Number of units Square footage Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Rent, general utilities, maintenance, facility depreciation, administrative salaries Commercial $ 25.19 per unit $10.95 per hour 6,000 10,000 200 10% 15,000 20,000 Home $15.19 per unit $8.95 per hour 12,000 45,000 2,000 20% 45,000 50,000 Miniature $ 12.19 per unit $9.95 per hour 2,000 25,000 800 70% 14,000 30,000 Machine hours Number of production orders Time spent by research department Square footage Cost Driver Total 20,000 80,000 3,000 100% 74,000 100,000 a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount. Check m

s Zachary Electronics produces video games in three market categories: commercial, home, and miniature. Zachary has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Total Pooled Cost $ 436,000 251,400 Direct materials cost Direct labor cost Number of labor hours 124,600 319,000 Additional data for each of the product lines follow: Number of machine hours Number of production orders Required Research and development time Number of units Square footage Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Rent, general utilities, maintenance, facility depreciation, administrative salaries Commercial $ 25.19 per unit $10.95 per hour 6,000 10,000 200 10% 15,000 20,000 Home $15.19 per unit $8.95 per hour 12,000 45,000 2,000 20% 45,000 50,000 Miniature $ 12.19 per unit $9.95 per hour 2,000 25,000 800 70% 14,000 30,000 Machine hours Number of production orders Time spent by research department Square footage Cost Driver Total 20,000 80,000 3,000 100% 74,000 100,000 a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount. Check m

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...

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