Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows: Activity Activity Pool Cost Activity Base Procurement $12,600 Number of purchase orders Scheduling 90,000 Number of production orders Materials handling 11,000 Number of moves Product development 50,000 Number of engineering changes Total cost $163,600 The estimated activity-base usage and unit information for two product lines was determined as follows: Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Change Orders Units Ovens 400 800 300 80 1,000 Refrigerators 300 400 200 120 500 Totals 700 1,200 500 200 1,500 a. Determine the activity rate for each activity cost pool. Procurement (per purchase order) Scheduling (per production order) Materials handling (per move) Product development (per engineering change order) b. Determine the activity-based cost per unit of each product. Round the per unit rates to the nearest cent. Ovens Refrigerators
Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows: Activity Activity Pool Cost Activity Base Procurement $12,600 Number of purchase orders Scheduling 90,000 Number of production orders Materials handling 11,000 Number of moves Product development 50,000 Number of engineering changes Total cost $163,600 The estimated activity-base usage and unit information for two product lines was determined as follows: Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Change Orders Units Ovens 400 800 300 80 1,000 Refrigerators 300 400 200 120 500 Totals 700 1,200 500 200 1,500 a. Determine the activity rate for each activity cost pool. Procurement (per purchase order) Scheduling (per production order) Materials handling (per move) Product development (per engineering change order) b. Determine the activity-based cost per unit of each product. Round the per unit rates to the nearest cent. Ovens Refrigerators
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows:
Activity | Activity Pool Cost | Activity Base | ||
Procurement | $12,600 | Number of purchase orders | ||
Scheduling | 90,000 | Number of production orders | ||
Materials handling | 11,000 | Number of moves | ||
Product development | 50,000 | Number of engineering changes | ||
Total cost | $163,600 |
The estimated activity-base usage and unit information for two product lines was determined as follows:
Number of Purchase Orders |
Number of Production Orders |
Number of Moves |
Number of Engineering Change Orders |
Units |
||||||||||||
Ovens | 400 | 800 | 300 | 80 | 1,000 | |||||||||||
Refrigerators | 300 | 400 | 200 | 120 | 500 | |||||||||||
Totals | 700 | 1,200 | 500 | 200 | 1,500 |
a. Determine the activity rate for each activity cost pool.
Procurement (per purchase order) | |
Scheduling (per production order) | |
Materials handling (per move) | |
Product development (per engineering change order) |
b. Determine the activity-based cost per unit of each product. Round the per unit rates to the nearest cent.
Ovens | |
Refrigerators |
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