A company manufactures a product with three models, each with different direct material costs and labour hour required and monthly production volume as follows: Model A Model B Model C Units of production Labour hour required Direct material costs 1,700 1,200 1,100 0.3 0.6 0.7 30 40 50 Labor rate is $10 per hour. The total manufacturing overhead is estimated to be $103,000 per month. Required: a) The manufacturing overhead is allocated to the three models based on labor hour. Compute the pre-determined overhead rate and the unit product cost of Model A. b) The company is considering to use the activity-based costing and gathers the following data related to the cost and activities: Expected Activity Activity Cost Pool Overhead Costs Model A Model B Model C Activity 1 $30,000 1,000 600 400 Activity 2 General Factory $17,000 1,700 200 100 $56,000 510 660 230 Total S103,000 i. Compute the activity rate for each activity. Compute the unit product costs of Model A and Model B. ii.

A company manufactures a product with three models, each with different direct material costs and labour hour required and monthly production volume as follows: Model A Model B Model C Units of production Labour hour required Direct material costs 1,700 1,200 1,100 0.3 0.6 0.7 30 40 50 Labor rate is $10 per hour. The total manufacturing overhead is estimated to be $103,000 per month. Required: a) The manufacturing overhead is allocated to the three models based on labor hour. Compute the pre-determined overhead rate and the unit product cost of Model A. b) The company is considering to use the activity-based costing and gathers the following data related to the cost and activities: Expected Activity Activity Cost Pool Overhead Costs Model A Model B Model C Activity 1 $30,000 1,000 600 400 Activity 2 General Factory $17,000 1,700 200 100 $56,000 510 660 230 Total S103,000 i. Compute the activity rate for each activity. Compute the unit product costs of Model A and Model B. ii.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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