Homework iswAsbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial. The Personal grinders have asmaller capacity and are less durable than the Commercial grinders. ACE only recently began producing the Commercial model. Sincethe introduction of the new product, profits have been steadily declining, although sales have been increasing. The management atACE believes that the problem might be in how the accounting system allocates costs to products.Direct materials.Direct laborThe current system at ACE allocates manufacturing overhead to products based on direct labor costs. For the most recent year, whichis representative, manufacturing overhead totaled $2,023,500 based on production of 30,000 Personal grinders and 10,000Commercial grinders. Direct costs were as follows:Cost DriverNumber of production runsQuality tests performedShipping orders processedTotal overheadhere to searchCINNAMONManagement has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are asfollows:LEXTEF100Personal$ 1,444,2001,029,00018Costs Assigned$ 967,500816,000240,000$2,023,500IMEACommercial$ 609,750657,250Required:a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the totalcost per unit produced for each product?b. How much overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost perunit produced for each product?4Office DEPOTComplete this question by entering your answers in the tabs below.Personal5015150Savedactual sizeActivity LevelPrevTotal$ 2,053,9501,686,250OMstaheavy gaugejumboPaper ClipsSPESTIERAиагЗЯЕТ393Commercial252550I WORK HARD SO MY CATCAN HAVIBETTER LIFETotal75401 of 4200Help Save &Next >DECHDa

The overhead allocation is a method of allocating indirect costs to the goods produced. It can be…

Asbury Coffee Enterprises (ACE) manufactures two models of coffee grinders: Personal and Commercial. The Personal grinders have a smaller capacity and are less durable than the Commercial grinders. ACE only recently began producing the Commercial model. Since the introduction of the new product, profits have been steadily declining, although sales have been increasing. The management at ACE believes that the problem might be in how the accounting system allocates costs to products. The current system at ACE allocates manufacturing overhead to products based on direct labor costs. For the most recent year, which is representative, manufacturing overhead totaled $2,023,500 based on production of 30,000 Personal grinders and 10,000 Commercial grinders. Direct costs were as follows: Direct materials. Direct labor Personal $ 1,444,200 1,029,000 Cost Driver Number of production runs Quality tests performed Shipping orders processed Total overhead Commercial $ 609,750 657,250 Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows: Costs Assigned $ 967,500 816,000 240,000 $ 2,023,500 Activity Level Personal 50 15 Total $2,053,950 1,686,250 150 Commercial Prev d25 25 50 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? Complete this question by entering your answers in the tabs below. b. How much overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? Total 75 40 200 1 of 4 Next >

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 2CMA: The Chocolate Baker specializes in chocolate baked goods. The firm has long assessed the...