Walnut Systems produces two products, Product A, which sells for $290 per unit, and Product B, which sells for $350 per unit, using three activities: Design, which uses engineering hours as the cost driver; Machining, which uses machine hours as the cost driver; and Inspection, which uses the number of batches as the cost driver. The cost of each activity and usage of the cost drivers are as follows: Activity Pool (Driver) Design (engineering hours) Machining (machine hours) Inspection (batches) Usage by Cost of Pool $ 150,000 500,000 30,000 Product A 370 1,680 Usage by Product B 130 2,320 30 30 Walnut manufactures 10,000 units of Product A and 6,880 units of Product B per month. Each unit of Product A uses $16 of direct materials and $54 of direct labor, while each unit of Product B uses $92 of direct materials and $52 of direct labor. Required: a. Calculate the Design activity proportions for Products A and B. b. Calculate the Machining activity proportions for Products A and B. c. Calculate the Inspection activity proportions for Products A and B.

Walnut Systems produces two products, Product A, which sells for $290 per unit, and Product B, which sells for $350 per unit, using three activities: Design, which uses engineering hours as the cost driver; Machining, which uses machine hours as the cost driver; and Inspection, which uses the number of batches as the cost driver. The cost of each activity and usage of the cost drivers are as follows: Activity Pool (Driver) Design (engineering hours) Machining (machine hours) Inspection (batches) Usage by Cost of Pool $ 150,000 500,000 30,000 Product A 370 1,680 Usage by Product B 130 2,320 30 30 Walnut manufactures 10,000 units of Product A and 6,880 units of Product B per month. Each unit of Product A uses $16 of direct materials and $54 of direct labor, while each unit of Product B uses $92 of direct materials and $52 of direct labor. Required: a. Calculate the Design activity proportions for Products A and B. b. Calculate the Machining activity proportions for Products A and B. c. Calculate the Inspection activity proportions for Products A and B.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...

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