Consider the following data for two products of Vigano Manufacturing Budgeted Cost Activity Machine setup Parts handling Quality inspections Total budgeted overhead Unit Information Units produced Direct materials cost Direct labor cost Direct labor hours Activity Driver $ 23,000 (20 machine setups) 18,400 (16,000 parts) 27,600 (100 inspections) $ 69,000 Product A 2,300 units $ 33 per unit $ 53 per unit 2 per unit Product B 460 units $ 43 per unit $ 63 per unit 2.50 per unit 1. Using a plantwide overhead rate based on 5,750 direct labor hours, compute the total product cost per unit for each product 2. Consider the following additional information about these two products. If activity-based costing is used to allocate overhead cost. (a) compute overhead activity rates. (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and (c) compute product cost per unit for each.
Consider the following data for two products of Vigano Manufacturing Budgeted Cost Activity Machine setup Parts handling Quality inspections Total budgeted overhead Unit Information Units produced Direct materials cost Direct labor cost Direct labor hours Activity Driver $ 23,000 (20 machine setups) 18,400 (16,000 parts) 27,600 (100 inspections) $ 69,000 Product A 2,300 units $ 33 per unit $ 53 per unit 2 per unit Product B 460 units $ 43 per unit $ 63 per unit 2.50 per unit 1. Using a plantwide overhead rate based on 5,750 direct labor hours, compute the total product cost per unit for each product 2. Consider the following additional information about these two products. If activity-based costing is used to allocate overhead cost. (a) compute overhead activity rates. (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and (c) compute product cost per unit for each.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Consider the following additional information about these two products. If activity-based costing is used to allocate overhead
cost, (a) compute overhead activity rates, (b) allocate overhead cost to Product A and Product B and compute overhead cost
per unit for each, and (c) compute product cost per unit for each. (Round your final answers to 2 decimal places.)
a. Compute overhead activity rates
Activity
Activity Rate
per setup
per part
per inspection
b. Allocate overhead to Product A, B and compute overhead cost per unit
Allocated Cost
Machine setup
Parts handling
Quality inspection
Activity
Machine setup
Parts handling
Quality inspection.
Total allocated cost
Units produced
- nar snit
Product A
Product B
$
INAMUM
Product A
OS
Product B
c. Product cost per unit using activity-based costing
Per Unit
Product Cost per
Unit
Show less A
4
Transcribed Image Text:Consider the following data for two products of Vigano Manufacturing.
Budgeted
Cost
Activity
Machine setup
Parts handling.
Quality inspections
Total budgeted overhead
Unit Information
Units produced
Direct materials cost.
Direct labor cost
Direct labor hours
Activity Driver
$ 23,000 (20 machine setups)
18,400 (16,000 parts)
27,600 (100 inspections),
$ 69,000
Actual Activity Usage
Setups
Parts
Inspections.
Product A
2,300 units,
$ 33 per unit
$53 per unit
2 per unit
Product B
460 units
$ 43 per unit
$ 63 per unit
2.50 per unit
1. Using a plantwide overhead rate based on 5,750 direct labor hours, compute the total product cost per unit for each product.
2. Consider the following additional information about these two products. If activity-based costing is used to allocate overhead cost.
(a) compute overhead activity rates. (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for
each, and (c) compute product cost per unit for each
Product A
8 setups
10,000 parts:
40 inspections
Product B
12 setups
6,000 parts
60 inspections
V
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