During the second year of operations, RetroSound Company continues to produce two types of units. deluxe and regular. Product- Costing Data Activity Usage Measures Units produced per year Prime costs Direct labor hours Machine hours Production runs Number of moves Deluxe Regular Total 5,000 50,000 55,000 $39,000 $369,000 $408,000 5,000 45,000 50,000 10,000 90,000 1,00,000 10 15 120 60 180 Activity Cost Data (Overhead Activities) Activity Activity driver Activity cost Setups Material handling Power Testing Total Production runs $60,000 Number of moves 30,000 Machine hours 50,000 Direct labor hours 40,000 $180,000 Requred A. Determine the unit cost for each model using direct labor hours to apply overhead. (Calculate a POHR first) B. Determine the unit cost for each model using the four
During the second year of operations, RetroSound Company continues to produce two types of units. deluxe and regular. Product- Costing Data Activity Usage Measures Units produced per year Prime costs Direct labor hours Machine hours Production runs Number of moves Deluxe Regular Total 5,000 50,000 55,000 $39,000 $369,000 $408,000 5,000 45,000 50,000 10,000 90,000 1,00,000 10 15 120 60 180 Activity Cost Data (Overhead Activities) Activity Activity driver Activity cost Setups Material handling Power Testing Total Production runs $60,000 Number of moves 30,000 Machine hours 50,000 Direct labor hours 40,000 $180,000 Requred A. Determine the unit cost for each model using direct labor hours to apply overhead. (Calculate a POHR first) B. Determine the unit cost for each model using the four
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:During the second year of operations, RetroSound Company continues to produce two types of units: deluxe and regular.
Product- Costing Data
Activity Usage Measures
Units produced per year
Prime costs
Deluxe
Regular
Total
5,000
$39,000
50,000
$369,000
55,000
$408,000
Direct labor hours
5,000
45,000
50,000
Machine hours
Production runs
10,000
90,000
1,00,000
10
15
Number of moves
120
60
180
Activity Cost Data (Overhead
Activities)
Activity
Activity driver
Activity cost
$60,000
Setups
Material handling
Production runs
Number of moves
30,000
Power
Machine hours
50,000
Testing
Total
Direct labor hours
40,000
$180,000
Required
A. Determine the unit cost for each model using direct labor hours to apply overhead. (Calculate a POHR first)
B. Determine the unit cost for each model using the four
activity drivers.
C. Which method produces the more accurate cost assignment? Why?
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