Homework Help is Here – Start Your Trial Now!
Business
Accounting
Hammer Company plans to use activity-based costing to determine its product costs. It presently uses a single plantwide factory overhead rate for allocating factory overhead to products, based on direct labor hours. The total factory overhead cost is as follows: Department Production support Factory Overhead $ 1,225,000 Production(factory overhead only) Total cost 175,000 1,400,000 The company determined that it performed four major activities in the Production Support Department. These activities, along with their budgeted activity costs, are as follows: Production support Activites Setup Production control Quality control Materials management Budgeted Activity Cost $ 428,750 245,000 183,750 367,500 1,225,000 Total Hammer estimated the following activity-base usage and units produced for each of its three products: Number of Direct labor Products Setups units hrs Production order Materials Inspections. Requisitions LCD TV 10,000 25,000 Tablet Smartphone 2,000 10,000 50,000 140,000 Total cost 62,000 175,000 24585 80 35 320 40 40 400 5 0 30 125 75 750 REQUIRED: 1. Determine the factory overhead cost per unit for the LCD TV and Tablet under the single plantwide factory overhead rate method. Use direct labor hours as the activity base. 2. Determine the factory overhead cost per unit for the LCD TV and Tablet under activity-based costing. Round to two decimal places. 3. Which method provides more accurate product costing? Why?

Hammer Company plans to use activity-based costing to determine its product costs. It presently uses a single plantwide factory overhead rate for allocating factory overhead to products, based on direct labor hours. The total factory overhead cost is as follows: Department Production support Factory Overhead $ 1,225,000 Production(factory overhead only) Total cost 175,000 1,400,000 The company determined that it performed four major activities in the Production Support Department. These activities, along with their budgeted activity costs, are as follows: Production support Activites Setup Production control Quality control Materials management Budgeted Activity Cost $ 428,750 245,000 183,750 367,500 1,225,000 Total Hammer estimated the following activity-base usage and units produced for each of its three products: Number of Direct labor Products Setups units hrs Production order Materials Inspections. Requisitions LCD TV 10,000 25,000 Tablet Smartphone 2,000 10,000 50,000 140,000 Total cost 62,000 175,000 24585 80 35 320 40 40 400 5 0 30 125 75 750 REQUIRED: 1. Determine the factory overhead cost per unit for the LCD TV and Tablet under the single plantwide factory overhead rate method. Use direct labor hours as the activity base. 2. Determine the factory overhead cost per unit for the LCD TV and Tablet under activity-based costing. Round to two decimal places. 3. Which method provides more accurate product costing? Why?

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...
See similar textbooks
icon
Related questions
Question

please answer in text form with introduction , concept , explanation, computation , steps clearly and completely for all parts in proper format no AI no copy paste will downvote if use AI or copy paste

Hammer Company plans to use activity-based costing to determine its product costs. It presently uses a single plantwide factory overhead rate for allocating factory overhead to products, based on direct labor hours. The total factory overhead cost is as follows: Department Production support Factory Overhead $ 1,225,000 Production(factory overhead only) Total cost 175,000 1,400,000 The company determined that it performed four major activities in the Production Support Department. These activities, along with their budgeted activity costs, are as follows: Production support Activites Setup Production control Quality control Materials management Budgeted Activity Cost $ 428,750 245,000 183,750 367,500 1,225,000 Total Hammer estimated the following activity-base usage and units produced for each of its three products: Number of Direct labor Products Setups units hrs Production order Materials Inspections. Requisitions LCD TV 10,000 25,000 Tablet Smartphone 2,000 10,000 50,000 140,000 Total cost 62,000 175,000 24585 80 35 320 40 40 400 5 0 30 125 75 750 REQUIRED: 1. Determine the factory overhead cost per unit for the LCD TV and Tablet under the single plantwide factory overhead rate method. Use direct labor hours as the activity base. 2. Determine the factory overhead cost per unit for the LCD TV and Tablet under activity-based costing. Round to two decimal places. 3. Which method provides more accurate product costing? Why?
Transcribed Image Text:Hammer Company plans to use activity-based costing to determine its product costs. It presently uses a single plantwide factory overhead rate for allocating factory overhead to products, based on direct labor hours. The total factory overhead cost is as follows: Department Production support Factory Overhead $ 1,225,000 Production(factory overhead only) Total cost 175,000 1,400,000 The company determined that it performed four major activities in the Production Support Department. These activities, along with their budgeted activity costs, are as follows: Production support Activites Setup Production control Quality control Materials management Budgeted Activity Cost $ 428,750 245,000 183,750 367,500 1,225,000 Total Hammer estimated the following activity-base usage and units produced for each of its three products: Number of Direct labor Products Setups units hrs Production order Materials Inspections. Requisitions LCD TV 10,000 25,000 Tablet Smartphone 2,000 10,000 50,000 140,000 Total cost 62,000 175,000 24585 80 35 320 40 40 400 5 0 30 125 75 750 REQUIRED: 1. Determine the factory overhead cost per unit for the LCD TV and Tablet under the single plantwide factory overhead rate method. Use direct labor hours as the activity base. 2. Determine the factory overhead cost per unit for the LCD TV and Tablet under activity-based costing. Round to two decimal places. 3. Which method provides more accurate product costing? Why?
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS