cost accounting project
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School
Metropolitan State University Of Denver *
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Course
3400
Subject
Industrial Engineering
Date
Feb 20, 2024
Type
docx
Pages
2
Uploaded by MateKuduPerson329
Pixelimited has been in operations for five years now and is having difficulty understanding the cost of
the four products from its electronics division that they manufacture. The company has a shared
manufacturing overhead cost of per quarter of $2,360,000 but is unsure of how to allocate it. The direct
costs (direct material and direct labor) are easily traceable to each product and the information for the
last quarter has been collected. A team at Pixelimited has worked together to identify
five
possible cost
drivers (units, machine setups, machine hours, direct labor hours, number of orders) for the shared
overhead cost. This information has also been collected for the last quarter and presented in the table
below. The team is ready for you help in allocating the overhead cost in order to determine the cost of
each of the four electronics products that Pixelimited produces.
Construct a spreadsheet that will allocate overhead and calculate unit cost for each of these alternative
drivers. Use the
VLOOKUP
function when constructing the spreadsheet so that you can determine the
effect of different cost drivers on the overhead allocated and the resulting cost per unit.
Format the
spreadsheet so that dollar amounts have a $
. For the per unit amounts format to two decimal places,
all other number should be format to zero decimal places. For numbers that are not dollar amounts,
format with a comma.
Do not hard key when a formula should be used.
Product
Name
Direct
Material
Direct Labor Units
# of
Machine
Setups
Machine
Hours
Direct
Labor
Hours
# of
Orders
Echo
$242,000
$398,475
25,300
15
379,500
18,975
250
Core
$238,000
$913,500
58,000
20
870,000
43,500
610
Bronze
$237,000
$645,750
41,000
18
615,000
30,750
430
Silver
$228,900
$159,600
8,750
8
131,250
7,600
180
Requirements
After constructing your spreadsheet answer the following questions?
1.
What is the cost per unit of each product when direct labor hours are used as the cost driver for
overhead allocation? (should be 4 answers)
2.
How much overhead is allocated to the Echo product line when machine hours are used as the
cost driver for overhead allocation?
3.
What is the total cost of the Bronze product line when # of orders are used as the cost driver for
overhead allocation?
4.
What is the cost per unit of the Silver product line when the # of machine setups is used as the
cost driver for overhead allocation?
5.
What is the allocation rate when machine hours are used as the cost driver?
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