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Great Furniture Inc. (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets he production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and abour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour ho s the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the ystem by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Cost Pool Parts receipts Machining Assembly Quality control Direct materials Direct labour Activity Base Number of parts Machine hours. Units produced Units tested Activity Rate $6.00 per part $18.00 per machine-hour $ 5.00 per unit $ 3.00 per unit Desks $4,806 $8,090 Activity Usage 506 parts 306 machine hours 506 units 106 units Ca 1,012 par 506 ma 400 un 206 un $8,700 $8,300 ach product consumed 506 direct labour hours. equired: Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based osting to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.)

Great Furniture Inc. (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets he production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and abour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour ho s the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the ystem by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Cost Pool Parts receipts Machining Assembly Quality control Direct materials Direct labour Activity Base Number of parts Machine hours. Units produced Units tested Activity Rate $6.00 per part $18.00 per machine-hour $ 5.00 per unit $ 3.00 per unit Desks $4,806 $8,090 Activity Usage 506 parts 306 machine hours 506 units 106 units Ca 1,012 par 506 ma 400 un 206 un $8,700 $8,300 ach product consumed 506 direct labour hours. equired: Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based osting to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.)

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 8E: A manufacturing company has two service and two production departments. Building Maintenance and...
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Great Furniture Inc. (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and labour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour hours as the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the system by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Cost Pool Parts receipts Machining Assembly Quality control Direct materials Direct labour Each product consumed 506 direct labour hours. Activity Base Number of parts Machine hours Units produced Units tested Total manufacturing cost Cost per unit Total manufacturing cost Cost per unit Desks Cabinets Desks Activity Rate $ 6.00 per part $18.00 per machine-hour $ 5.00 per unit $ 3.00 per unit. Cabinets Desks $4,806 $8,090 Required: 1. Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based costing to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.) Activity Usage 506 parts 306 machine hours. 506 units 106 units 2. Redo the above using direct labour hours as the allocation base. (Round "Cost per unit" answers to 2 decimal places.) Cabinets 1,012 parts 506 machine hours 400 units 206 units $8,700 $8,300
Transcribed Image Text:Great Furniture Inc. (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and labour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour hours as the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the system by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Cost Pool Parts receipts Machining Assembly Quality control Direct materials Direct labour Each product consumed 506 direct labour hours. Activity Base Number of parts Machine hours Units produced Units tested Total manufacturing cost Cost per unit Total manufacturing cost Cost per unit Desks Cabinets Desks Activity Rate $ 6.00 per part $18.00 per machine-hour $ 5.00 per unit $ 3.00 per unit. Cabinets Desks $4,806 $8,090 Required: 1. Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based costing to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.) Activity Usage 506 parts 306 machine hours. 506 units 106 units 2. Redo the above using direct labour hours as the allocation base. (Round "Cost per unit" answers to 2 decimal places.) Cabinets 1,012 parts 506 machine hours 400 units 206 units $8,700 $8,300
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