Fairchild, Inc., manufactures two products, Regular and Deluxe, and applies overhead on the basis of direct labor hours. Anticipated overhead and direct labor time for the upcoming accounting period are $2,138,400 and 42,400 hours, respectively. Information about the company's products follows. Regular- Estimated production volume: 2,200 units Direct materials cost: $36 per unit Direct labor per unit: 4 hours at $23 per hour Deluxe- Estimated production volume: 5,600 units Direct materials cost: $50 per unit Direct labor per unit: 6 hours at $23 per hour Fairchild's overhead of $2,138,400 can be identified with three major activities: order processing ($254,000), machine processing ($1,580,800), and product inspection ($303,600). These activities are driven by number of orders processed, machine hours worked, and inspection hours, respectively. Data relevant to these activities follow. Orders Machine Hours Inspection Processed Worked Hours 16,800 24,800 Regular 240 5,600 Deluxe 260 7,600 Total 500 41,600 13,200 Required: A. Compute the pool rates that would be used for order processing, machine processing, and product inspection in an activity-based costing system. B. Assuming use of activity-based costing, compute the unit manufacturing costs of Regular and Deluxe if the expected manufacturing volume is attained. (Round your intermediate calculations and final answers to 2 decimal places.) C. How much overhead would be applied to a unit of Regular and Deluxe if the company used traditional costing and applied overhead solely on the basis of direct labor hours? Which of the two products would be undercosted by this procedure? Overcosted? (Round your intermediate calculations and final answers to 2 decimal places.)
Fairchild, Inc., manufactures two products, Regular and Deluxe, and applies overhead on the basis of direct labor hours. Anticipated overhead and direct labor time for the upcoming accounting period are $2,138,400 and 42,400 hours, respectively. Information about the company's products follows. Regular- Estimated production volume: 2,200 units Direct materials cost: $36 per unit Direct labor per unit: 4 hours at $23 per hour Deluxe- Estimated production volume: 5,600 units Direct materials cost: $50 per unit Direct labor per unit: 6 hours at $23 per hour Fairchild's overhead of $2,138,400 can be identified with three major activities: order processing ($254,000), machine processing ($1,580,800), and product inspection ($303,600). These activities are driven by number of orders processed, machine hours worked, and inspection hours, respectively. Data relevant to these activities follow. Orders Machine Hours Inspection Processed Worked Hours 16,800 24,800 Regular 240 5,600 Deluxe 260 7,600 Total 500 41,600 13,200 Required: A. Compute the pool rates that would be used for order processing, machine processing, and product inspection in an activity-based costing system. B. Assuming use of activity-based costing, compute the unit manufacturing costs of Regular and Deluxe if the expected manufacturing volume is attained. (Round your intermediate calculations and final answers to 2 decimal places.) C. How much overhead would be applied to a unit of Regular and Deluxe if the company used traditional costing and applied overhead solely on the basis of direct labor hours? Which of the two products would be undercosted by this procedure? Overcosted? (Round your intermediate calculations and final answers to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hello,
Please fill the table with answers. PFA screenshot for the table and question with values.
Transcribed Image Text:A. Order processing
508 per OP
Machine processing
$
38 per MH
Product inspection
$
23 per IH
B. Activity-Based Costing
Regular
Deluxe
C. Traditional Costing
Regular
Deluxe
Transcribed Image Text:Fairchild, Inc., manufactures two products, Regular and Deluxe, and applies overhead on the basis of direct labor hours. Anticipated
overhead and direct labor time for the upcoming accounting period are $2,138,400 and 42,400 hours, respectively. Information about
the company's products follows.
Regular-
Estimated production volume: 2,200 units
Direct materials cost: $36 per unit
Direct labor per unit: 4 hours at $23 per hour
Deluxe-
Estimated production volume: 5,600 units
Direct materials cost: $50 per unit
Direct labor per unit: 6 hours at $23 per hour
Fairchild's overhead of $2,138,400 can be identified with three major activities: order processing ($254,000), machine processing
($1,580,800), and product inspection ($303,600). These activities are driven by number of orders processed, machine hours worked,
and inspection hours, respectively. Data relevant to these activities follow.
ETTI
Orders
Machine Hours
Inspection
Processed
Worked
Hours
Regular
240
16,800
5,600
Deluxe
260
24,800
7,600
Total
500
41,600
13,200
Required:
A. Compute the pool rates that would be used for order processing, machine processing, and product inspection in an activity-based
costing system.
B. Assuming use of activity-based costing, compute the unit manufacturing costs of Regular and Deluxe if the expected manufacturing
volume is attained. (Round your intermediate calculations and final answers to 2 decimal places.)
C. How much overhead would be applied to a unit of Regular and Deluxe if the company used traditional costing and applied
overhead solely on the basis of direct labor hours? Which of the two products would be undercosted by this procedure? Overcosted?
(Round your intermediate calculations and final answers to 2 decimal places.)
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