Activity Total cost Total driver activity Drilling Pressing $10,000 $6,000 20,000 operations 24,000 operations Driver activity (per unit of new product) 2 operations 6 operations The proposed new product is not expected to cause any overhead cost driver activity other than that associated with drilling or pressing. Required: (a) Calculate the unit cost of the proposed new product using a traditional costing approach. (6 marks) (b) Calculate the activity based costing cost driver rates per drilling and pressing operation. (2 marks) (c) Calculate the unit cost of the proposed new product using activity based costing principles. (4 marks) (Total: 12 marks)
Activity Total cost Total driver activity Drilling Pressing $10,000 $6,000 20,000 operations 24,000 operations Driver activity (per unit of new product) 2 operations 6 operations The proposed new product is not expected to cause any overhead cost driver activity other than that associated with drilling or pressing. Required: (a) Calculate the unit cost of the proposed new product using a traditional costing approach. (6 marks) (b) Calculate the activity based costing cost driver rates per drilling and pressing operation. (2 marks) (c) Calculate the unit cost of the proposed new product using activity based costing principles. (4 marks) (Total: 12 marks)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
Transcribed Image Text:Activity
Total cost
Total driver activity
Drilling
Pressing
$10,000
$6,000
20,000 operations
24,000 operations
Driver activity
(per unit of new product)
2 operations
6 operations
The proposed new product is not expected to cause any overhead cost driver activity
other than that associated with drilling or pressing.
Required:
(a) Calculate the unit cost of the proposed new product using a traditional costing
approach.
(6 marks)
(b) Calculate the activity based costing cost driver rates per drilling and pressing
operation.
(2 marks)
(c) Calculate the unit cost of the proposed new product using activity based costing
principles.
(4 marks)
(Total: 12 marks)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education