Class Problem Supplement-1 (1)

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2100

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Accounting

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Apr 3, 2024

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Smith Corp. produces three products: Pencils, Staplers, and Crayons. Smith uses department overhead rates for Assembly and Packing, both of which are based on machine hours. The following information is available for the next period: Product Pencils Staplers Crayons Units Produced 1,000 1,000 2,000 Machine Hours (Assembly) 1 3 2 Machine Hours (Packing) 1 1 1 Direct Labor hours (per unit) 2 2 2 Direct Materials cost (per unit) $10.00 $90.00 $30.00 Note that the direct labor wage rate is a flat $25 per hour with no overtime incurred. Also, total overhead costs are $420,000 for the Assembly Department and $240,000 for the Packing Department. Calculate the effect of using a plantwide rate as opposed to departmental overhead rates on the three products. (Round to two decimal places, when necessary.)

Santos Corporation manufactures two products: X and Y. The total indirect manufacturing overhead resource costs of $100,350 have been assigned to four activity cost pools that use the following cost drivers: Product Number of Setups Machine Runs Packing Hours Orders Product X 20 35 1,000 75 Product Y 10 70 1,500 125 Activity Pool Machine Setup Machine Lubrication Product Packing Order Taking Cost per Pool $8,100 $5,100 $65,000 $22,000 Required: a. Compute the unit activity costs for each of the cost drivers listed. b. Assign the overhead costs to products X and Y using activity-based costing.

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