Davis Manufacturing expects to produce 18,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below: ACTIVITIES UNIT LEVEL BATCH Cost $30,000 LEVEL $40,000 PRODUCT LEVEL $10,000 Cost Driver 2,400 labor 200 setups % of use FACILITY LEVEL $140,000 18,000 units hrs Production of 1,200 units of a solar panel required 480 labor hours, 14 setups, and consumed 40% of the product-sustaining activities. How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours?

Davis Manufacturing expects to produce 18,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below: ACTIVITIES UNIT LEVEL BATCH Cost $30,000 LEVEL $40,000 PRODUCT LEVEL $10,000 Cost Driver 2,400 labor 200 setups % of use FACILITY LEVEL $140,000 18,000 units hrs Production of 1,200 units of a solar panel required 480 labor hours, 14 setups, and consumed 40% of the product-sustaining activities. How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 27E: Plata Company has identified the following overhead activities, costs, and activity drivers for the...

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Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Plata produces two models of microwave ovens with the following activity demands: The companys normal activity is 21,000 machine hours. Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system: a. 230,000 b. 240,000 c. 280,000 d. 190,000
Crystal Pools estimates overhead will utilize 250,000 machine hours and cost $750,000. It takes 2 machine hours per unit, direct material cost of $14 per unit, and direct labor of $20 per unit. What is the cost of each unit produced?
Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?
Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are 12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per minute (the amount of conversion cost actually assigned to the product). 3. Discuss how this approach to assigning conversion cost can improve delivery time performance. Explain how conversion cost acts as a performance driver for on-time deliveries.
Remarkable Enterprises requires four units of part A for every unit of Al that it produces. Currently, part A is made by Remarkable, with these per-unit costs in a month when 4,000 units were produced: Variable manufacturing overhead is applied at $1.60 per unit. The other $0.50 of overhead consists of allocated fixed costs. Remarkable will need 8,000 units of part A for the next years production. Altoona Corporation has offered to supply 8,000 units of part A at a price of $8.00 per unit. If Remarkable accepts the offer, all of the variable costs and $2,000 of the fixed costs will be avoided. Should Remarkable accept the offer from Altoona Corporation?
Davis Manufacturing expects to produce 18,000 total units during the current period.
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