Filling Smoker Company (FSC) makes two types of barbeque smokers - Basic and Hi-Tech. Here is information about these two product lines Basic Hi-Tech Seling price per unit Direct materials per unit |Direct labour per unit Direct labour hours per unit |Estmated annual unit sales (assume inventory is constant) 430 670 165 425 60 90 2.0 3.0 75,000 25,000 FSC has a traditional costing system where manufacturing overhead is applied to units on the basis of direct labour hours. FSC estimates that for the upcoming year it will incur: Estimated manufacturing overhead %24 2,700,000 Estimated total direct labour hours 225,000 Required (where possible complete your work in the space immediately below each question. If you need more space insert additional rows): 1 What is the total cost and gross margin per unit for the Basic and Hi-Tech models assuming FSC uses a traditional costing system? 2 FSC is looking at adopting an activity based costing system instead of using the traditional costing system. Preliminary work shows that manufacturing overhead costs can be sorted into 4 activity cost pools as follows Expected Activity Activity Estimated Activity Measure Overhead Costs Basic Hi-Tech Total direct labour hours # of setups # of products square feet Supporting direct labour Batch costs 1,150,000 150,000 75,000 225,000 1240,000 75 275 350 Product related 210,000 1 1 Other 100,000 2,700,000 15,000 17,500 32,500 What is the total cost and the gross margin per unit for the Basic and the Hi-tech models using Activity Based Costing?
Filling Smoker Company (FSC) makes two types of barbeque smokers - Basic and Hi-Tech. Here is information about these two product lines Basic Hi-Tech Seling price per unit Direct materials per unit |Direct labour per unit Direct labour hours per unit |Estmated annual unit sales (assume inventory is constant) 430 670 165 425 60 90 2.0 3.0 75,000 25,000 FSC has a traditional costing system where manufacturing overhead is applied to units on the basis of direct labour hours. FSC estimates that for the upcoming year it will incur: Estimated manufacturing overhead %24 2,700,000 Estimated total direct labour hours 225,000 Required (where possible complete your work in the space immediately below each question. If you need more space insert additional rows): 1 What is the total cost and gross margin per unit for the Basic and Hi-Tech models assuming FSC uses a traditional costing system? 2 FSC is looking at adopting an activity based costing system instead of using the traditional costing system. Preliminary work shows that manufacturing overhead costs can be sorted into 4 activity cost pools as follows Expected Activity Activity Estimated Activity Measure Overhead Costs Basic Hi-Tech Total direct labour hours # of setups # of products square feet Supporting direct labour Batch costs 1,150,000 150,000 75,000 225,000 1240,000 75 275 350 Product related 210,000 1 1 Other 100,000 2,700,000 15,000 17,500 32,500 What is the total cost and the gross margin per unit for the Basic and the Hi-tech models using Activity Based Costing?
Chapter1: Financial Statements And Business Decisions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Filling Smoker Company (FSC) makes two types of barbeque smokers - Basic and Hi-Tech. Here is information about these two product
lines:
Basic
Hi-Tech
Selling price per unit
Direct materials per unit
Direct labour per unit
Direct labour hours per unit
Estmated annual unit sales
(assume inventory is constant)
24
430
%24
670
165
425
60
90
2.0
3.0
75,000
25,000
FSC has a traditional costing system where manufacturing overhead is applied to units on the basis of direct labour hours. FSC estimates
that for the upcoming year it will incur:
Estimated manufacturing overhead
2$
2,700,000
225,000
Estimated total direct labour hours
Required (where possible complete your work in the space immediately below each question. If you need
more space insert additional rows):
1 What is the total cost and gross margin per unit for the Basic and Hi-Tech models assuming FSC uses a traditional costing system?
2 FSC is looking at adopting an activity based costing system instead of using the traditional costing system. Preliminary work shows that
manufacturing overhead costs can be sorted into 4 activity cost pools as follows:
Expected Activity
Activity
Estimated
Activity
Measure
Overhead Costs
Basic
Hi-Tech
Total
direct labour
Supporting direct labour
Batch costs
hours
1,150,000
1,240,000
210,000
100,000
2,700,000
150,000
75,000
225,000
# of setups
# of products
75
275
350
Product related
1
1
2
Other
square feet
15,000
17,500
32,500
What is the total cost and the gross margin per unit for the Basic and the Hi-tech models using Activity Based Costing?
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