Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: The Deluxe and the Regular. At the beginning of the year 2019, the following data were prepared for this plant: Deluxe Regular Quantity 20 000 80 000 Selling price $90 $75 Unit direct cost $53 $48 In addition, the following information was provided so that overhead costs could be assigned to each product: Activity name Activity Cost Activity driver Deluxe Regular Set-up $200,000 Number of set-up 3 000 5 000 Machining 800,000 Machine hours 10 000 30 000 Engineering 600,000 Engineering hours 100 000 50 000 Packing 100,000 Packing orders 1 000 4 000 Total overhead costs $1,700,000 Required: Calculate the production overhead cost allocated to each product in 2019 using machine-hours as the cost driver (traditional costing system). Calculate the production overhead cost allocated to each product in 2019 using the Activity-based approach to costing system.
Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: The Deluxe and the Regular. At the beginning of the year 2019, the following data were prepared for this plant: Deluxe Regular Quantity 20 000 80 000 Selling price $90 $75 Unit direct cost $53 $48 In addition, the following information was provided so that overhead costs could be assigned to each product: Activity name Activity Cost Activity driver Deluxe Regular Set-up $200,000 Number of set-up 3 000 5 000 Machining 800,000 Machine hours 10 000 30 000 Engineering 600,000 Engineering hours 100 000 50 000 Packing 100,000 Packing orders 1 000 4 000 Total overhead costs $1,700,000 Required: Calculate the production overhead cost allocated to each product in 2019 using machine-hours as the cost driver (traditional costing system). Calculate the production overhead cost allocated to each product in 2019 using the Activity-based approach to costing system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: The Deluxe and the Regular. At the beginning of the year 2019, the following data were prepared for this plant:
|
|
Deluxe |
Regular |
|
Quantity |
20 000 |
80 000 |
|
Selling price |
$90 |
$75 |
|
Unit direct cost |
$53 |
$48 |
In addition, the following information was provided so that
|
Activity name |
Activity Cost |
Activity driver |
Deluxe |
Regular |
|
Set-up |
$200,000 |
Number of set-up |
3 000 |
5 000 |
|
Machining |
800,000 |
Machine hours |
10 000 |
30 000 |
|
Engineering |
600,000 |
Engineering hours |
100 000 |
50 000 |
|
Packing |
100,000 |
Packing orders |
1 000 |
4 000 |
|
Total overhead costs |
$1,700,000 |
|
|
|
Required:
- Calculate the production overhead cost allocated to each product in 2019 using machine-hours as the cost driver (traditional costing system).
- Calculate the production overhead cost allocated to each product in 2019 using the Activity-based approach to costing system.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education