Exercise 17-11 (Algo) Computing product cost per unit using plantwide method and activity-based costing LO P1, P3 Consider the following data for two products of Vigano Manufacturing. Activity Budgeted Cost Activity Driver (20 machine setups) 11,200 (16,000 parts) (100 inspections) Machine setup $ 14,000 Parts handling Quality inspections Total budgeted overhead 16,800 $ 42,000 Unit Information Product A Product B Units produced 1,400 units 280 units

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Exercise 17-11 (Algo) Computing product cost per unit using plantwide method and activity-based
costing LO P1, P3
Consider the following data for two products of Vigano Manufacturing.
Activity
Budgeted
Cost
Activity Driver
(20 machine
setups)
11,200 (16,000 parts)
(100
inspections)
Machine setup
$ 14,000
Parts handling
Quality inspections
16,800
Total budgeted
overhead
$ 42,000
Unit
Information
Units produced
Direct
materials cost
Product A
Product B
1,400 units
280 units
$ 24 per unit
$ 34 per unit
Direct labor
cost
Direct labor
hours
$ 44 per unit
$ 54 per unit
2 per unit
2.50 per unit
1. Using a plantwide overhead rate based on 3,500 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.
Actual Activity
Usage
Setups
Parts
Inspections
Product A
Product B
8 setups
10,000 parts
40 inspections
12 setups
6,000 parts
60 inspections
Complete this question by entering your answers in the tabs below.
Required Required
1
2
Using a plantwide overhead rate based on 3,500 direct labor hours, compute the total
product cost per unit for each product.
Product
Direct
Direct
Cost per
Unit
Per Unit
Overhead
Materials
Labor
Product A
Product B
Required 1
Required 2 >
Transcribed Image Text:Exercise 17-11 (Algo) Computing product cost per unit using plantwide method and activity-based costing LO P1, P3 Consider the following data for two products of Vigano Manufacturing. Activity Budgeted Cost Activity Driver (20 machine setups) 11,200 (16,000 parts) (100 inspections) Machine setup $ 14,000 Parts handling Quality inspections 16,800 Total budgeted overhead $ 42,000 Unit Information Units produced Direct materials cost Product A Product B 1,400 units 280 units $ 24 per unit $ 34 per unit Direct labor cost Direct labor hours $ 44 per unit $ 54 per unit 2 per unit 2.50 per unit 1. Using a plantwide overhead rate based on 3,500 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. Actual Activity Usage Setups Parts Inspections Product A Product B 8 setups 10,000 parts 40 inspections 12 setups 6,000 parts 60 inspections Complete this question by entering your answers in the tabs below. Required Required 1 2 Using a plantwide overhead rate based on 3,500 direct labor hours, compute the total product cost per unit for each product. Product Direct Direct Cost per Unit Per Unit Overhead Materials Labor Product A Product B Required 1 Required 2 >
Required Required
1
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 ProductB 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.)
Show lessA
a. Compute overhead activity rates
Activity Rate
|per setup
per part
per inspection
Activity
Machine setup
Parts handling
Quality inspection
b. Allocate overhead to Product A, B and compute
overhead cost per unit
Allocated Cost
Activity
Product A
Product B
Machine setup
Parts handling
Quality inspection
Total allocated cost
Units produced
Overhead cost per unit
c. Product cost per unit using activity-based costing
Product Cost
Per Unit
per Unit
Product A
Product B
< Required 1
Required 2 >
Transcribed Image Text:Required Required 1 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 ProductB 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.) Show lessA a. Compute overhead activity rates Activity Rate |per setup per part per inspection Activity Machine setup Parts handling Quality inspection b. Allocate overhead to Product A, B and compute overhead cost per unit Allocated Cost Activity Product A Product B Machine setup Parts handling Quality inspection Total allocated cost Units produced Overhead cost per unit c. Product cost per unit using activity-based costing Product Cost Per Unit per Unit Product A Product B < Required 1 Required 2 >
Expert Solution
Step 1 Introduction

The activity based costing is used to apply overhead cost to products on the basis of different activity performed at various levels.

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