Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below: Product V9 Product M6 Total direct labor-hours. Product V9 Product M6 Direct Materials Cost per Unit. $ 287.60 $ 180.80 Activity Cost Pools Labor-related. The direct labor rate is $26.60 per DLH. The direct materials cost per unit for each product is given below: Product testing Order size Expected Production 580 680 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Traditional unit product cost ABC unit product cost Difference Activity Measures DLHS Tests MHS Direct Labor-Hours Per Unit Product V9 11.8 8.8 Estimated Overhead Product M6 Total Direct Cost $ 101,656 75,208 Labor-Hours 6,844 5,984 12,828 398,000 $ 574,864 Product V9 6,844 1,020 5,300 Expected Activity Product M6 Required: Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answers as positive values.) 5,984 1,360 4,720 Total 12,828 2,380 10,020
Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below: Product V9 Product M6 Total direct labor-hours. Product V9 Product M6 Direct Materials Cost per Unit. $ 287.60 $ 180.80 Activity Cost Pools Labor-related. The direct labor rate is $26.60 per DLH. The direct materials cost per unit for each product is given below: Product testing Order size Expected Production 580 680 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Traditional unit product cost ABC unit product cost Difference Activity Measures DLHS Tests MHS Direct Labor-Hours Per Unit Product V9 11.8 8.8 Estimated Overhead Product M6 Total Direct Cost $ 101,656 75,208 Labor-Hours 6,844 5,984 12,828 398,000 $ 574,864 Product V9 6,844 1,020 5,300 Expected Activity Product M6 Required: Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answers as positive values.) 5,984 1,360 4,720 Total 12,828 2,380 10,020
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected production
of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
Product V9
Product M6
Total direct labor-hours
Product V9
Product M6
Direct Materials Cost
per Unit
$ 287.60
$ 180.80
The direct labor rate is $26.60 per DLH. The direct materials cost per unit for each product is given below:
Activity Cost Pools
Labor-related
Product testing
Order size
Expected
Production
580
680
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and
expected activity:
Traditional unit product cost
ABC unit product cost
Difference
Direct Labor-Hours
Per Unit
DLHS
Tests
MHS
11.8
8.8
Activity Estimated Overhead
Measures
Product V9
Product M6
Total Direct
Labor-Hours
6,844
5,984
12,828
Cost
$ 101,656
75,208
398,000
$ 574,864
Product V9
6,844
1,020
5,300
Expected Activity
Product M6
Required:
Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system for
each of the two products. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answers as
positive values.)
5,984
1,360
4,720
Total
12,828
2,380
10,020
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