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Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $283,200. During that time, the company produced 12,200 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows. Direct materials Direct labor M-008 M-123 $ 97,600 $ 88,000 97,600 44,000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Total $ 185,600 141,600 Costs $104,700 80,000 98,500 $283,200 Activity Level M-008 M-123 Total 1,000 9,000 10,000 10 30 15 35 40 50 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? Complete this question by entering your answers in the tabs below.

Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $283,200. During that time, the company produced 12,200 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows. Direct materials Direct labor M-008 M-123 $ 97,600 $ 88,000 97,600 44,000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Total $ 185,600 141,600 Costs $104,700 80,000 98,500 $283,200 Activity Level M-008 M-123 Total 1,000 9,000 10,000 10 30 15 35 40 50 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? Complete this question by entering your answers in the tabs below.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company’s two versions of a special reel used for river fishing: the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a report to headquarters. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $283,200. During that time, the company produced 12,200 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows. | | M-008 | M-123 | Total | |--------------------|--------|--------|-----------| | Direct materials | $97,600| $88,000| $185,600 | | Direct labor | 97,600 | 44,000 | 141,600 | Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. | Cost Driver | Costs | M-008 | M-123 | Total | |--------------------------|----------|-------|-------|---------| | Number of machine-hours | $104,700 | 1,000 | 9,000 | 10,000 | | Number of production runs| 80,000 | 10 | 30 | 40 | | Number of inspections | 98,500 | 15 | 35 | 50 | | Total overhead | $283,200 | | | | **Required:** a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? **Complete this question by entering your answers in the tabs below.** **Required A | Required B** How much of the overhead will be assigned to each product if
Transcribed Image Text:Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company’s two versions of a special reel used for river fishing: the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a report to headquarters. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $283,200. During that time, the company produced 12,200 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows. | | M-008 | M-123 | Total | |--------------------|--------|--------|-----------| | Direct materials | $97,600| $88,000| $185,600 | | Direct labor | 97,600 | 44,000 | 141,600 | Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. | Cost Driver | Costs | M-008 | M-123 | Total | |--------------------------|----------|-------|-------|---------| | Number of machine-hours | $104,700 | 1,000 | 9,000 | 10,000 | | Number of production runs| 80,000 | 10 | 30 | 40 | | Number of inspections | 98,500 | 15 | 35 | 50 | | Total overhead | $283,200 | | | | **Required:** a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? **Complete this question by entering your answers in the tabs below.** **Required A | Required B** How much of the overhead will be assigned to each product if
**Overview:** Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company’s two versions of a special reel used for river fishing: the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned as the cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters. **Direct Costs Information:** During the most recent month, manufacturing overhead was calculated at $283,200. The company produced 12,200 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows: | | M-008 | M-123 | Total | |------------------|--------|---------|----------| | Direct materials | $97,600| $88,000 | $185,600 | | Direct labor | 97,600 | $44,000 | $141,600 | **Cost Drivers:** Management determined that overhead costs are driven by three cost drivers. These are listed with their costs for the last year: | Cost Driver | Costs | M-008 | M-123 | Total | |-------------------------|---------|-------|-------|-------| | Number of machine-hours | $104,700| 1,000 | 9,000 | 10,000| | Number of production runs| 80,000 | 10 | 30 | 40 | | Number of inspections | 98,500 | 15 | 35 | 50 | **Total Overhead: $283,200** **Required Analyses:** **a.** Calculate the overhead assigned to each product using the three cost drivers. Determine the total cost per unit for each product. **b.** Determine the overhead assigned using direct labor cost and calculate the total cost per unit for each product. **Interactive Section:** Users are prompted to enter their calculations in a provided interactive section with two tabs for solutions: - **Required A:** To enter overhead calculations using cost drivers. - **Required B:** To enter overhead calculations using direct labor costs. The form provides fields to calculate and display the total overhead and unit cost for both
Transcribed Image Text:**Overview:** Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company’s two versions of a special reel used for river fishing: the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned as the cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters. **Direct Costs Information:** During the most recent month, manufacturing overhead was calculated at $283,200. The company produced 12,200 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows: | | M-008 | M-123 | Total | |------------------|--------|---------|----------| | Direct materials | $97,600| $88,000 | $185,600 | | Direct labor | 97,600 | $44,000 | $141,600 | **Cost Drivers:** Management determined that overhead costs are driven by three cost drivers. These are listed with their costs for the last year: | Cost Driver | Costs | M-008 | M-123 | Total | |-------------------------|---------|-------|-------|-------| | Number of machine-hours | $104,700| 1,000 | 9,000 | 10,000| | Number of production runs| 80,000 | 10 | 30 | 40 | | Number of inspections | 98,500 | 15 | 35 | 50 | **Total Overhead: $283,200** **Required Analyses:** **a.** Calculate the overhead assigned to each product using the three cost drivers. Determine the total cost per unit for each product. **b.** Determine the overhead assigned using direct labor cost and calculate the total cost per unit for each product. **Interactive Section:** Users are prompted to enter their calculations in a provided interactive section with two tabs for solutions: - **Required A:** To enter overhead calculations using cost drivers. - **Required B:** To enter overhead calculations using direct labor costs. The form provides fields to calculate and display the total overhead and unit cost for both
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