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Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based osting to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.)

Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based osting to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Green Furniture (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and labour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour-hours as the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the system by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Usage Desks 2,100 parts Activity Cost Pool Parts receipts Machining Assembly Quality control Activity Base Number of parts Machine-hours Activity Rate Cabinets $ 1.00 per part $15.00 per machine-hour $ 1.40 per unit $ 2.00 per unit 1,450 parts 315 machine-hours 215 machine-hours Units produced Units tested 1,450 units 1,350 units $ 2,900 1,050 units 105 units $ 5,250 $12,600 Direct materials Direct labour $12,600 Each product consumed 630 direct labour-hours. Required: 1. Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based costing to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.) Answer is complete and correct. Desks Cabinets Total manufacturing cost 2$ 24,855 $ 26,405 Cost per unit $ 23.67 O $ 18.21 O 2. Redo the above using direct labour-hours as the allocation base. (Round "Cost per unit" answers to 2 decimal places.) Answer is complete but not entirely correct. Desks Cabinets Total manufacturing cost 24 26,802 x $ 38.300 X Cost per unit 25.53 16.86 O
Transcribed Image Text:Green Furniture (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and labour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour-hours as the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the system by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Usage Desks 2,100 parts Activity Cost Pool Parts receipts Machining Assembly Quality control Activity Base Number of parts Machine-hours Activity Rate Cabinets $ 1.00 per part $15.00 per machine-hour $ 1.40 per unit $ 2.00 per unit 1,450 parts 315 machine-hours 215 machine-hours Units produced Units tested 1,450 units 1,350 units $ 2,900 1,050 units 105 units $ 5,250 $12,600 Direct materials Direct labour $12,600 Each product consumed 630 direct labour-hours. Required: 1. Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based costing to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.) Answer is complete and correct. Desks Cabinets Total manufacturing cost 2$ 24,855 $ 26,405 Cost per unit $ 23.67 O $ 18.21 O 2. Redo the above using direct labour-hours as the allocation base. (Round "Cost per unit" answers to 2 decimal places.) Answer is complete but not entirely correct. Desks Cabinets Total manufacturing cost 24 26,802 x $ 38.300 X Cost per unit 25.53 16.86 O
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