EyeGuard Equipment Incorporated (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines—the highest-quality product is called Safe-T, and a low-cost, value version is called Safe-V. Information on the factory conversion costs for EEI is as follows: Factory Costs Salaries $ 850,000 Supplies 150,000 Factory expense 550,000 Total $ 1,550,000 EEI uses ABC to determine the unit costs of its products. The firm uses resource consumption cost drivers based on rough estimates of the amount that each activity consumes, as shown below. EEI has four activities: job setup, assembly, inspecting and finishing, and packaging. Setup Assembly Inspecting and Finishing Packaging Total Salaries 15% 55% 20% 10% 100% Supplies 20 60 20 100 Factory expense 80 20 100 The activity cost drivers for the two products are summarized below. Activities Activity Driver Setup Batch Assembly Units Inspect and finishing Finishing hours Packaging Packing hours Safe-V Safe-T Batches 250 600 Units 60,000 72,000 Finishing hours, per unit 0.2 0.3 Packaging hours, per unit 0.1 0.15 Materials per unit $ 3.50 $ 6.00 Required: 1. Determine the amount of the cost pool for each of the four activities. 2. Determine the activity-driver rates for assigning factory costs to the two products. 3. Determine the activity-based unit cost for each of the products.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

EyeGuard Equipment Incorporated (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines—the highest-quality product is called Safe-T, and a low-cost, value version is called Safe-V. Information on the factory conversion costs for EEI is as follows:

	Factory Costs
Salaries	$ 850,000
Supplies	150,000
Factory expense	550,000
Total	$ 1,550,000

EEI uses ABC to determine the unit costs of its products. The firm uses resource consumption cost drivers based on rough estimates of the amount that each activity consumes, as shown below. EEI has four activities: job setup, assembly, inspecting and finishing, and packaging.

	Setup	Assembly	Inspecting and Finishing	Packaging	Total
Salaries	15%	55%	20%	10%	100%
Supplies	20	60	20		100
Factory expense		80	20		100

The activity cost drivers for the two products are summarized below.

Activities	Activity Driver
Setup	Batch
Assembly	Units
Inspect and finishing	Finishing hours
Packaging	Packing hours

	Safe-V	Safe-T
Batches	250	600
Units	60,000	72,000
Finishing hours, per unit	0.2	0.3
Packaging hours, per unit	0.1	0.15
Materials per unit	$ 3.50	$ 6.00

Required:

1. Determine the amount of the cost pool for each of the four activities.

2. Determine the activity-driver rates for assigning factory costs to the two products.

3. Determine the activity-based unit cost for each of the products.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions