P8.33Traditional and activity-based product costing: manufacturerThe accountant for Snappy Photographic Supply Ltd has estimated the following activity cost pools andactivity drivers for the coming year:LO8.58.6Budgeted level foractivity driverBudgetedCost per unit ofActivityoverhead costActivity driveractivity driverMachine setups$300000No. of setups100$3000 per setupMaterial handling150000Weight of raw material50000 kilograms$3 per kilogramWeight of hazardouschemicals usedHazardous waste control7500010000 kilograms$7.50 per kilogramS112.50 per inspection$15 per machine hourQuality control112500No. of inspections1 000Other overhead costs300000Machine hours20000Total$937 500An order for 1000 boxes of film development chemicals has the following production requirements:Machine setups4 setupsRaw material10000 kilogramsHazardous materials2000 kilogramsInspections10 inspectionsMachine hours500 machine hoursRequired: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 machinehours, calculate the rate per hour.4. Under the approach in requirement 3, how much overhead would be assigned to the order for developmentchemicals:(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 yourecommend? Why?6. Calculate the unit cost of a production order for 100 specially coated plates used in film development. Inaddition to direct material costing $180 per plate and direct labour costing $60 per plate, the orderrequires the following:Machine setups2 setupsRaw material800 kilogramsHazardous materials300 kilogramsInspections3 inspectionsMachine hours50 machine hours

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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

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

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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