Budgeted Budgeted level for Cost per u Activity overhead cost Activity driver activity driver activity dm Machine setups $300000 No. of setups 100 $3000 per setu Material handling 150000 Weight of raw material 50000 kilograms $3 per kilogram Weight of hazardous chemicals used Hazardous waste control 75000 10000 kilograms $7.50 per kilog Quality control 112500 No. of inspections 1 000 S112.50 per in: Other overhead costs $15 per machir 300000 Machine hours 20000
Budgeted Budgeted level for Cost per u Activity overhead cost Activity driver activity driver activity dm Machine setups $300000 No. of setups 100 $3000 per setu Material handling 150000 Weight of raw material 50000 kilograms $3 per kilogram Weight of hazardous chemicals used Hazardous waste control 75000 10000 kilograms $7.50 per kilog Quality control 112500 No. of inspections 1 000 S112.50 per in: Other overhead costs $15 per machir 300000 Machine hours 20000
Chapter5: Process Costing
Section: Chapter Questions
Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...
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![P8.33
Traditional and activity-based product costing: manufacturer
The accountant for Snappy Photographic Supply Ltd has estimated the following activity cost pools and
activity drivers for the coming year:
LO8.5
8.6
Budgeted level for
activity driver
Budgeted
Cost per unit of
Activity
overhead cost
Activity driver
activity driver
Machine setups
$300000
No. of setups
100
$3000 per setup
Material handling
150000
Weight of raw material
50000 kilograms
$3 per kilogram
Weight of hazardous
chemicals used
Hazardous waste control
75000
10000 kilograms
$7.50 per kilogram
S112.50 per inspection
$15 per machine hour
Quality control
112500
No. of inspections
1 000
Other overhead costs
300000
Machine hours
20000
Total
$937 500
An order for 1000 boxes of film development chemicals has the following production requirements:
Machine setups
4 setups
Raw material
10000 kilograms
Hazardous materials
2000 kilograms
Inspections
10 inspections
Machine hours
500 machine hours
Required:
1. Calculate the total overhead that should be assigned to the order for development chemicals.
2. What is the overhead cost per box of chemicals?
3. If Snappy Photographic Supply were to use a plantwide predetermined overhead rate based on machine
hours, calculate the rate per hour.
4. Under the approach in requirement 3, how much overhead would be assigned to the order for development
chemicals:
(a) in total
(b) per box of chemicals?
5. Explain why these two product costing systems result in such widely differing costs. Which system do you
recommend? Why?
6. Calculate the unit cost of a production order for 100 specially coated plates used in film development. In
addition to direct material costing $180 per plate and direct labour costing $60 per plate, the order
requires the following:
Machine setups
2 setups
Raw material
800 kilograms
Hazardous materials
300 kilograms
Inspections
3 inspections
Machine hours
50 machine hours](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fff5cfc83-4aec-4b90-a63e-a9b36e0c832b%2F18566f1b-028e-43a9-bb05-47514f84a8f7%2Fj6scryi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:P8.33
Traditional and activity-based product costing: manufacturer
The accountant for Snappy Photographic Supply Ltd has estimated the following activity cost pools and
activity drivers for the coming year:
LO8.5
8.6
Budgeted level for
activity driver
Budgeted
Cost per unit of
Activity
overhead cost
Activity driver
activity driver
Machine setups
$300000
No. of setups
100
$3000 per setup
Material handling
150000
Weight of raw material
50000 kilograms
$3 per kilogram
Weight of hazardous
chemicals used
Hazardous waste control
75000
10000 kilograms
$7.50 per kilogram
S112.50 per inspection
$15 per machine hour
Quality control
112500
No. of inspections
1 000
Other overhead costs
300000
Machine hours
20000
Total
$937 500
An order for 1000 boxes of film development chemicals has the following production requirements:
Machine setups
4 setups
Raw material
10000 kilograms
Hazardous materials
2000 kilograms
Inspections
10 inspections
Machine hours
500 machine hours
Required:
1. Calculate the total overhead that should be assigned to the order for development chemicals.
2. What is the overhead cost per box of chemicals?
3. If Snappy Photographic Supply were to use a plantwide predetermined overhead rate based on machine
hours, calculate the rate per hour.
4. Under the approach in requirement 3, how much overhead would be assigned to the order for development
chemicals:
(a) in total
(b) per box of chemicals?
5. Explain why these two product costing systems result in such widely differing costs. Which system do you
recommend? Why?
6. Calculate the unit cost of a production order for 100 specially coated plates used in film development. In
addition to direct material costing $180 per plate and direct labour costing $60 per plate, the order
requires the following:
Machine setups
2 setups
Raw material
800 kilograms
Hazardous materials
300 kilograms
Inspections
3 inspections
Machine hours
50 machine hours
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