FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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5-22 ABC,
Sander company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented below:
Annual production in unit
Mathematical: $45,000
Financial: $90,000
Direct Materials Cost
Mathematical: $180,000
Financial: $360,000
Direct Manufacturing Labour Cost
Mathematical: $90,000
Financial: $180,000
Direct Manufacturing Labour Hours
Mathematical: 4,500
Financial: 9,000
Machine Hours
Mathematical: 30,000
Financial: 60,000
Number of production runs
Mathematical: 45
Financial: 45
Inspection Hours
Mathematical: 1200
Financial: 600
Total Manufacturing
Machining Cost Total $360,000
Set up Cost Total $108,000
Inspection Cost Total $117,000
Required:
- Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.
- Compute the manufacturing overhead cost for each product.
- How might Sander's Manager use the new cost information from it's activity based costing system to better manage it's business?
- Compute the
manufacturing cost for each product.
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