Manji After reviewing the new activity-based costing system that Nancy Chen has Implemented at IVC's CenterPoint manufacturing facility,Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups.He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability.He plans to produce 100,000 units of the Sport model and 40,000 units of the Pro model in the first quarter. He believes that with hismore efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by one-third.Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing FacilityActivityCost DriverSportCost Driver VolumeProTotalAssembly buildingAssemblingSetting up machinesMachine-hoursSetup hours6,000Handling materialProduction runs40830,0004004036,00044048Packaging buildingInspecting and packingShippingDirect labor-hoursNumber of shipments60,00010022,80020082,800зееThird Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing FacilityDirect materialSport$ 1,500,000Direct laborAssemblyPackagingTotal direct laborDirect costsOverheadAssembly building$ 750,000990,000$ 1,740,000$ 3,240,000Pro$ 2,400,000$ 600,000360,000$ 960,000$ 3,360,000Assembling (@ $30 per MH)Setting up machines (@ $900 per setup hour)Handling material (@ $3,000 per run)Packaging buildingInspecting and packing (@ $5 per direct labor-hour)Shipping (@$1,320 per shipment)Total ABC overheadTotal ABC costNumber of unitsUnit costRequired:120,000114,000264,000$ 180,00036,00024,000300,000132,000$ 672,000$ 3,912,000$ 900,000360,000$ 1,758,000$ 5,118,000$ 127.95100,000$ 39.1240,000a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activity-based costing.Assume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume thecost of a setup hour remains at $900.ModelSportProTotal ABCOverhead

Activity based costing is a method of costing that identifies various activities undertaken by the…

After reviewing the new activity-based costing system that Nancy Chen has Implemented at IVC's CenterPoint manufacturing facility. Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability. He plans to produce 100,000 units of the Sport model and 40,000 units of the Pro model in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by one-third. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Activity Cost Driver Sport Cost Driver Volume Pro Total Assembly building Assembling Setting up machines Machine-hours Setup hours 6,000 Handling material Production runs 40 8 30,000 400 40 36,000 440 48 Packaging building Inspecting and packing Shipping Direct labor-hours Number of shipments 60,000 100 22,800 200 82,see зее Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport $ 1,500,000 Direct material Direct labor Assembly Packaging Total direct labor Direct costs Overhead Assembly building Assembling (@ $30 per MH) Setting up machines (@ $900 per setup hour) Handling material (@ $3,eee per run) Packaging building Inspecting and packing (@ $5 per direct labor-hour) Shipping ($1,320 per shipment) Total ABC overhead Total ABC cost Number of units $ 750,000 990,000 $ 1,740,000 $ 3,240,000 Pro $ 2,400,000 $ 600,000 360,000 $960,000 $ 3,360,000 $ 180,000 36,000 $ 900,000 360,000 24,000 300,000 132,000 $ 672,000 $ 3,912,000 100,000 $ 39.12 120,000 114,000 264,000 $ 1,758,000 $ 5,118,000 40,000 $127.95 Unit cost Required: a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activity-based costing. Assume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume the cost of a setup hour remains at $900. Model Sport Pro Total ABC Overhead

After reviewing the new activity-based costing system that Nancy Chen has Implemented at IVC's CenterPoint manufacturing facility. Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability. He plans to produce 100,000 units of the Sport model and 40,000 units of the Pro model in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by one-third. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Activity Cost Driver Sport Cost Driver Volume Pro Total Assembly building Assembling Setting up machines Machine-hours Setup hours 6,000 Handling material Production runs 40 8 30,000 400 40 36,000 440 48 Packaging building Inspecting and packing Shipping Direct labor-hours Number of shipments 60,000 100 22,800 200 82,see зее Third Quarter Unit Cost Report, Activity-Based Costing-CenterPoint Manufacturing Facility Sport $ 1,500,000 Direct material Direct labor Assembly Packaging Total direct labor Direct costs Overhead Assembly building Assembling (@ $30 per MH) Setting up machines (@ $900 per setup hour) Handling material (@ $3,eee per run) Packaging building Inspecting and packing (@ $5 per direct labor-hour) Shipping ($1,320 per shipment) Total ABC overhead Total ABC cost Number of units $ 750,000 990,000 $ 1,740,000 $ 3,240,000 Pro $ 2,400,000 $ 600,000 360,000 $960,000 $ 3,360,000 $ 180,000 36,000 $ 900,000 360,000 24,000 300,000 132,000 $ 672,000 $ 3,912,000 100,000 $ 39.12 120,000 114,000 264,000 $ 1,758,000 $ 5,118,000 40,000 $127.95 Unit cost Required: a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activity-based costing. Assume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume the cost of a setup hour remains at $900. Model Sport Pro Total ABC Overhead

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter13: Emerging Topics In Managerial Accounting

Section: Chapter Questions

Problem 31BEB: Gumbrecht Company has the following departmental manufacturing layout for one of its plants: A...

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