Gee Manufacturing produces two models of camshafts used in theproduction of automobile engines: Regular and High Performance. Geecurrently uses an ABC system to assign costs to the two products.For the coming year, the company has the following overheadactivities, costs, and activity drivers: Activity DriverActivity Capacity Activity Expected Cost Setups $214,612 Setup hours 10,000 Machining $420,000 Machine hours 20,000 Moving $112,500 Move hours 5,000 Total OH $747,112 At practical capacity, the expected activity demands for eachproduct are as follows: HighPerformanceModel RegularPerformanceModel Units completed 30,000 8,000 Setup hours 8,000 2,000 Machine hours 6,000 14,000 Moving hours 1,000 4,000 The production cycle time for the regular performance camshaftis 0.50 (hours per unit) and that of the high performance camshaftis 2.5 (hours per unit).1. Calculate the consumption ratios for eachactivity. Use these consumption ratios to assign the total overheadto each camshaft model and then calculate the overhead cost perunit for each model (round unit cost to two decimal places).
Gee Manufacturing produces two models of camshafts used in theproduction of automobile engines: Regular and High Performance. Geecurrently uses an ABC system to assign costs to the two products.For the coming year, the company has the following overheadactivities, costs, and activity drivers: Activity DriverActivity Capacity Activity Expected Cost Setups $214,612 Setup hours 10,000 Machining $420,000 Machine hours 20,000 Moving $112,500 Move hours 5,000 Total OH $747,112 At practical capacity, the expected activity demands for eachproduct are as follows: HighPerformanceModel RegularPerformanceModel Units completed 30,000 8,000 Setup hours 8,000 2,000 Machine hours 6,000 14,000 Moving hours 1,000 4,000 The production cycle time for the regular performance camshaftis 0.50 (hours per unit) and that of the high performance camshaftis 2.5 (hours per unit).1. Calculate the consumption ratios for eachactivity. Use these consumption ratios to assign the total overheadto each camshaft model and then calculate the overhead cost perunit for each model (round unit cost to two decimal places).
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 27E: Plata Company has identified the following overhead activities, costs, and activity drivers for the...
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Gee Manufacturing produces two models of camshafts used in theproduction of automobile engines: Regular and High Performance. Geecurrently uses an ABC system to assign costs to the two products.For the coming year, the company has the following overheadactivities, costs, and activity drivers:
Activity DriverActivity Capacity
| Activity | Expected Cost | |||
| Setups | $214,612 | Setup hours | 10,000 | |
| Machining | $420,000 | Machine hours | 20,000 | |
| Moving | $112,500 | Move hours | 5,000 | |
| Total OH | $747,112 |
At practical capacity, the expected activity demands for eachproduct are as follows:
High
Performance
Model
| Regular Performance Model |
|||
| Units completed | 30,000 | 8,000 | |
| Setup hours | 8,000 | 2,000 | |
| Machine hours | 6,000 | 14,000 | |
| Moving hours | 1,000 | 4,000 |
The production cycle time for the regular performance camshaftis 0.50 (hours per unit) and that of the high performance camshaftis 2.5 (hours per unit).
1. Calculate the consumption ratios for eachactivity. Use these consumption ratios to assign the total overheadto each camshaft model and then calculate the
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