Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 110,000 330,000 — Prime costs $9,020,000 $38,280,000 $47,300,000 Machine hours 110,000 550,000 660,000 Engineering hours 400 3,600 4,000 Receiving orders 300 900 1,200 Inspection hours 1,000 2,000 3,000 Overhead costs: Machining $9,900,000 Engineering 2,240,000 Receiving 240,000 Inspecting products 390,000 Required: 1. Calculate the four activity rates. Machining rate 15 Engineering rate 560 Receiving rate 200 Inspecting rate 130 2. Calculate the unit costs using activity rates. Round your answers to the nearest cent. Unit cost Basic Advanced Calculate the overhead cost per unit. Round your answers to the nearest cent. Overhead Cost Basic Advanced 3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity. Cost assignment Basic Advanced
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 110,000 330,000 — Prime costs $9,020,000 $38,280,000 $47,300,000 Machine hours 110,000 550,000 660,000 Engineering hours 400 3,600 4,000 Receiving orders 300 900 1,200 Inspection hours 1,000 2,000 3,000 Overhead costs: Machining $9,900,000 Engineering 2,240,000 Receiving 240,000 Inspecting products 390,000 Required: 1. Calculate the four activity rates. Machining rate 15 Engineering rate 560 Receiving rate 200 Inspecting rate 130 2. Calculate the unit costs using activity rates. Round your answers to the nearest cent. Unit cost Basic Advanced Calculate the overhead cost per unit. Round your answers to the nearest cent. Overhead Cost Basic Advanced 3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity. Cost assignment Basic Advanced
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 4PB: Activity-based product costing Sweet Sugar Company manufactures three products (white sugar, brown...
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Activity-Based Product Costing
Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.
Basic | Advanced | Total | ||||
Units produced | 110,000 | 330,000 | — | |||
Prime costs | $9,020,000 | $38,280,000 | $47,300,000 | |||
Machine hours | 110,000 | 550,000 | 660,000 | |||
Engineering hours | 400 | 3,600 | 4,000 | |||
Receiving orders | 300 | 900 | 1,200 | |||
Inspection hours | 1,000 | 2,000 | 3,000 | |||
Machining | $9,900,000 | |||||
Engineering | 2,240,000 | |||||
Receiving | 240,000 | |||||
Inspecting products | 390,000 |
Required:
1. Calculate the four activity rates.
Machining rate | 15 |
Engineering rate | 560 |
Receiving rate | 200 |
Inspecting rate | 130 |
2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.
Unit cost | |
Basic | |
Advanced |
Calculate the overhead cost per unit. Round your answers to the nearest cent.
Overhead Cost | |
Basic | |
Advanced |
3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity.
Cost assignment | |
Basic | |
Advanced |
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