" Harrison Company makes two products and uses a traditional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow: Rascon $ 12.00 $ 2.50 Direct materials cost per unit Direct labor cost per unit Direct labor-hours per unit Number of units produced 0.20 12,000. These products are customized to some degree for specific customers. Parcel $6.00 $ 3.60 0.25 44,000 Required: 1. The company's manufacturing overhead costs for the year are expected to be $281,400. Using the company's traditional costing system, compute the unit product costs for the two products. 2. Management is considering an activity-based absorption costing system in which half of the overhead would continue to be allocated based on direct labor-hours and half would be allocated based on engineering design time. This time is expected to be distributed as follows during the upcoming year: Parcel Rascon 4,800 4,800 Total 9,600 Engineering design time (in hours) Compute the unit product costs for the two products using the proposed activity-based absorption costing system.
" Harrison Company makes two products and uses a traditional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow: Rascon $ 12.00 $ 2.50 Direct materials cost per unit Direct labor cost per unit Direct labor-hours per unit Number of units produced 0.20 12,000. These products are customized to some degree for specific customers. Parcel $6.00 $ 3.60 0.25 44,000 Required: 1. The company's manufacturing overhead costs for the year are expected to be $281,400. Using the company's traditional costing system, compute the unit product costs for the two products. 2. Management is considering an activity-based absorption costing system in which half of the overhead would continue to be allocated based on direct labor-hours and half would be allocated based on engineering design time. This time is expected to be distributed as follows during the upcoming year: Parcel Rascon 4,800 4,800 Total 9,600 Engineering design time (in hours) Compute the unit product costs for the two products using the proposed activity-based absorption costing system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:1
Harrison Company makes two products and uses a traditional costing system in which a single plantwide predetermined overhead
rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:
Rascon
$ 12.00
$ 2.50
0.20
12,000.
Parcel
$ 6.00
$ 3.60
0.25
44,000
Direct materials cost per unit
Direct labor cost per unit
Direct labor-hours per unit
Number of units produced
These products are customized to some degree for specific customers.
Required:
1. The company's manufacturing overhead costs for the year are expected to be $281,400. Using the company's traditional costing
system, compute the unit product costs for the two products.
2. Management is considering an activity-based absorption costing system in which half of the overhead would continue to be
allocated based on direct labor-hours and half would be allocated based on engineering design time. This time is expected to be
distributed as follows during the upcoming year:
Rascon
Parcel
Engineering design time (in hours)
4,800 4,800
Compute the unit product costs for the two products using the proposed activity-based absorption costing system.
Total
9,600
Transcribed Image Text:Required 1 Required 2
The company's manufacturing overhead costs for the year are expected to be $281,400. Using the company's traditional
costing system, compute the unit product costs for the two products. (Round your intermediate calculations and final answers
to 2 decimal places.)
Unit product cost
Rascon
Required 1 Required 2
Unit product cost
Compute the unit product costs for the two products using the proposed activity-based absorption costing system. (Round
your intermediate calculations and final answers to 2 decimal places.)
Parcel
Rascon
Parcel
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