Question 2 Moon produces tow products the A and B. The direct costs of the two products are given below: Direct materials Direct Labour A Materials handling Production set up costs £4.00 £3.00 The budgeted production for 80,000 units of A and 30,000 units of B. The two main activities identified for the simple production process are material handling and production set ups. Product A requires large production runs and large transfers of materials from stores. However, product B is a more complex product with a number of different types of materials required and shorter and more frequent production runs. The use of these activities for each product is The budgeted fixed overheads of Caplan are £600,000 and they are made up as follows: £200,000 £400,000 £600,000 A Number Material Handling requisitions 100 Number of Production Set Ups 50 Required: B £4.20 £2.20 B 400 200 Total 500 250 Calculate the unit cost of each product using the costing method of Activity Based Costing.

Question 2 Moon produces tow products the A and B. The direct costs of the two products are given below: Direct materials Direct Labour A Materials handling Production set up costs £4.00 £3.00 The budgeted production for 80,000 units of A and 30,000 units of B. The two main activities identified for the simple production process are material handling and production set ups. Product A requires large production runs and large transfers of materials from stores. However, product B is a more complex product with a number of different types of materials required and shorter and more frequent production runs. The use of these activities for each product is The budgeted fixed overheads of Caplan are £600,000 and they are made up as follows: £200,000 £400,000 £600,000 A Number Material Handling requisitions 100 Number of Production Set Ups 50 Required: B £4.20 £2.20 B 400 200 Total 500 250 Calculate the unit cost of each product using the costing method of Activity Based Costing.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 5PB: Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units...

See similar textbooks

Similar questions

Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units of Simple and 146,100 of Removable, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: Â How much is the overhead allocated to each unit of Simple and Removable?
Epsilon Corporation has two products with the following resource requirements and related costs: Total Costs Product X Product Y Total Equipment Set Ups Raw Material Orders P 300,000 250,000 400 200 600 200 50 250 Units produced If Epsilon originally allocated the aforementioned overhead costs based on units produced, how much would a unit of Product X absorb more/(less) under AB Costing? 50,000 200,000 250,000
Question No. 4: Production under Constrained Resources Glover Company makes three products in a single facility. These products have the following unit product costs:ProductABCDirect materials$35.10$51.60$58.00Direct labor22.5025.1015.90Variable manufacturing overhead2.301.701.60Fixed manufacturing overhead12.207.808.40Unit product cost$72.10$86.20$83.90Additional data concerning these products are listed below.ProductABCMixing minutes per unit1.300.800.20Selling price per unit$81.00$103.40$96.90Variable selling cost per unit$2.90$3.40$3.20Monthly demand in units310044002400The mixing machines are potentially the constraint in the production facility. A total of 7930 minutes are available per month on these machines. Direct labor is a variable cost in this company.Required : a. How many minutes of mixing machine time be required to satisfy demand for all three products?b. How much of each product should be produced to maximize net operating income?ABCOptimal productionc. Up to how much…
QUESTION 3 Afiza Group manufactures customized equipment for local market. The data for the period were as follows: Budgeted overhead Actual direct labour hours Budgeted direct labour hours Direct material: Direct labour: A B Actual machine hours 6,200 hours 4,700 hours Budgeted machine hours' 5,700 hours 5,300 hours An order is received from Encik Fahim to manufacture an equipment for his personal use. The data related to the costs of the equipment were as follows: Machining Finishing Machining department RM50,000 Hire of special machine Administrative expenses Machine hours: 5,000 hours 5,400 hours Finishing department RM65,000 RM 1,500 RM2,100 6,000 hours 5,800 hours 500 hours @ RM2.50 per hour 450 hours @ RM3.20 per hour RM1,200 15% of factory costs Machining Finishing 321 hours 670 hours Profit 25% of total cost Overhead absorption is based on machine hour for the Machining department and direct labour hour for Finishing department. Required: a) Prepare a Job Cost Sheet showing…
Heidelberg Fabrication manufactures two products, G-09 and G-35: Units produced Direct materials cost per unit Machine-hours per unit Production runs per quarter Machine depreciation Setup labor Materials handling Total G-09 19,300 Required: $7 4 144 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow: a. Overhead rate b. Machine depreciation $ 104,220 52,110 41,688 $ 198,018 G-35 3,860 $19 Exercise 9-36 (Algo) Activity-Based Costing and Cost Driver Rates (LO 9-4) 7 72 a. Heidelberg currently applies overhead on the basis of machine-hours. What is the predetermined overhead rate for the quarter? Note: Round your answer to 2 decimal places. b. Heidelberg is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine-hours for machine depreciation, production runs for setup labor, and direct material dollars for materials handling. Compute the cost driver rates for the…
The following standard costs pertain to a component part manufactured by Ashby Company:Direct materials$2Direct labour5Manufacturing overhead 20 Standard cost per unit $27The company can purchase the part from an outside supplier for $25 per unit. The manufacturing overhead is 60% fixed and this fixed portion would not be affected by this decision. Assume that direct labour is an avoidable cost in this decision. What is the relevant amount of the standard cost per unit to be considered in a decision of whether to make the part internally or buy it from the external supplier?
Question No.6 Hunter Company manufactures two products (XX and YY). The overhead costs have been divided into four cost pools that use the following activity drivers. Product Number of Orders Number of Set-ups Number of Labor Transactions Labor Hours XX YY Cost per pool 60 20 Rs.16,000 20 80 Rs.13,000 50 70 Rs.2,400 2,000 500 Rs.20,000 Required: Compute the allocation rates for each of the activity drivers listed. Allocate the overhead costs to product XX and product YY using activity-based costing. Compute the overhead rate using machine hours under the functional-based costing system. Allocate the overhead cost to Product XX and YY using the functional-based costing system overhead rate calculated in part C.
Your Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: Estimated Expected Activity Activity Cost Pool Cost Product A Product B Total Machine related $17,600 700 300 1,000 MH Batch setup $32,600 600 200 800 Setups Other $52,500 900 500 1,400 DLH What is the activity rate under the activity-based costing system for Batch setups? Group of answer choices $54.33 $40.75 $40.75 per Setup $16.30 $16.30 per Setup $54.33 per Setup
B. Find the cost of a product Different costs are presented below Direct materials $ 5.00 per unit Indirect materials $ 2.00 per unit Direct labor $ 10.00 per hour Indirect labor $ 3.00 per hour Other variable indirect costs $ 6.00 per hour Other fixed indirect costs $ 10.00 per unit Commissions to sellers $ 4.00 per unit Variable administrative costs $ 6.00 per unit Fixed Administrative Costs $ 10.00 per unit 3. If marketing studies show that the maximum price that consumers are willing to pay for this type of product is $ 48.00, determine how much cost you must reduce in order to maintain the desired% profit
Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Rims Posts Direct Labor- Hours per unit 0.70 0.80 Annual Production Additional information about the company follows: a. Rims require $14 in direct materials per unit, and Posts require $10. b. The direct labor wage rate is $20 per hour. Activity Cost Pool Machine setups Special processing General factory 26,000 units 90,000 units c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Unit product cost of Rims Unit product cost of Posts Activity Measure Number of setups Machine-hours Direct labor-hours Estimated Overhead Cost $ 33,300 $ 172,800 $ 858,000 Estimated Activity Rims 70 3,000 18,200 Posts 230 0 72,000 Total 300 3,000 90,200 2. Determine the unit product cost of each product…
Brian Industries has been producing two ingredients, components G1 and G2, for use in manufacturing its main products. G1 7.5 G2 Machine hours required per unit Standard cost per unit: 9.0 Direct material P 4.50 P 7.50 Direct labor 8.00 9.00 Manufacturing overhead: Variable (See Ref. 1) Fixed (See Ref. 2) 4.00 4.50 9.00 P 30.00 7.50 P 24.00 Brian's annual need for these ingredients is 8,000 units of G1 and 11,000 units of G2. Recently, Brian's management decided to devote additional machine time to other product lines resulting in only 123,000 machine hours per year that can be dedicated to the production of the ingredients. An outside company has offered to sell Brian the annual supply of the ingredients at prices of P22.50 for G1 and P27.00 for G2. Brian wants to schedule the otherwise idle 123,000 machine hours to produce ingredients so that the company can maximize its net benefits (or minimize its costs). Ref. 1: Variable manufacturing overhead is applied on the basis of direct…
No. 1 The following is relevant for a production process for Period 1: Direct material cost $10,000 Direct labour cost $5,000 Overheads $3,000 Total costs $18,000 The process produces joint products A and B, which are then sold at the prices given below. The output figure represents all of the output from the process: Product A Product B Units of output 2,000 8,000 Price per unit $5 $2.50 Required: Calculate the cost of sales, and gross profit for products A and B assuming: (i) joint costs are apportioned by market value (ii) joint costs are apportioned by production units.