9) Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows: Activities Material handling Assembly Inspection Cost driver Number of parts Labor hours Time at inspection station Allocation Rate $2 per part $20 per hour $3 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor hour. a. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labor hours, and 2.5 minutes of inspection time. b. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 100 remote controls are produced? The batch requires 450 parts, 8 direct manufacturing labor hours, and 10 minutes of inspection time.

9) Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows: Activities Material handling Assembly Inspection Cost driver Number of parts Labor hours Time at inspection station Allocation Rate $2 per part $20 per hour $3 per minute The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor hour. a. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labor hours, and 2.5 minutes of inspection time. b. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 100 remote controls are produced? The batch requires 450 parts, 8 direct manufacturing labor hours, and 10 minutes of inspection time.

Name: 9) Nichols Inc. manufactures remote controls. Currently the company u
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Description: 9) Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturingoverhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting departmentto identify

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Nichols Inc. manufactures remote controls. Currently the company uses a plant- wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers: Activities Material handling Assembly Inspection Cost driver Number of parts Labour hours Time at inspection station The current traditional cost method allocates overhead based on direct manufacturing abour hours using a rate of £200 per labour hour. a. b. Allocation Rate £2 per part £20 per hour £3 per minute What are the indirect manufacturing costs per remote control assuming an activity- based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labour hours, and 2.5 minutes of inspection time. £4.00 per remote control £6.55 per remote control £24.00 per remote control £327.50 per remote control C. d.