Drilling Company uses activity-based costing and provides this information: Driver Rate Manufacturing Activity Cost Driver Materials handling Number of parts Number of machine hours Number of parts Number of finished units Machinery Assembly Inspection $ 0.40 61.00 3.35 40.00 Drilling has just completed 90 units of a component for a customer. Each unit required 110 parts and 3.50 machine hours. The prime cost is $1,400 per finished unit. All other manufacturing costs are classified as manufacturing overhead. Required: 1. Compute the total manufacturing costs and the unit costs of the 90 units just completed using ABC costing. 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $190 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $310 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category. Complete this question by entering your answers in the tabs below.
Drilling Company uses activity-based costing and provides this information: Driver Rate Manufacturing Activity Cost Driver Materials handling Number of parts Number of machine hours Number of parts Number of finished units Machinery Assembly Inspection $ 0.40 61.00 3.35 40.00 Drilling has just completed 90 units of a component for a customer. Each unit required 110 parts and 3.50 machine hours. The prime cost is $1,400 per finished unit. All other manufacturing costs are classified as manufacturing overhead. Required: 1. Compute the total manufacturing costs and the unit costs of the 90 units just completed using ABC costing. 2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including research and development and product design, is $190 per unit. The total cost of downstream activities, such as distribution, marketing, and customer service, is $310 per unit. Compute the full product cost per unit, including upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category. Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
ll.
Subject :- Accounting
Transcribed Image Text:Drilling Company uses activity-based costing and provides this information:
Driver
Rate
$
0.40
61.00
3.35
40.00
Manufacturing
Activity
Cost Driver
Materials handling Number of parts
Number of machine
hours
Number of parts
Number of finished.
units
Machinery
Assembly
Inspection
Drilling has just completed 90 units of a component for a customer. Each unit required 110 parts and 3.50 machine
hours. The prime cost is $1,400 per finished unit. All other manufacturing costs are classified as manufacturing
overhead.
Required:
1. Compute the total manufacturing costs and the unit costs of the 90 units just completed using ABC costing.
2. In addition to the manufacturing costs, the firm has determined that the total cost of upstream activities, including
research and development and product design, is $190 per unit. The total cost of downstream activities, such as
distribution, marketing, and customer service, is $310 per unit. Compute the full product cost per unit, including
upstream, manufacturing, and downstream activities. Also compute the relative proportion of each main cost category.
Complete this question by entering your answers in the tabs below.
Required Required
1
2
Compute the total manufacturing costs and the unit costs of the 90 units just completed
using ABC costing. (Round your intermediate and final answers to 2 decimal places.)
Total manufacturing cost
Manufacturing cost per
unit
< Required 1
Required 2 >
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