Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Activity Assembly Machining Setups Budgeted Cost $ 311,400 22,000 $ 333,400 Finishing Inspecting $ 226,000 Support Purchasing $ 134,000 Budgeted Activity Activity Cost Driver Machine hours (MH) Usage 7,600 Setups 120 Inspections 780 Purchase orders 510 Additional production information concerning its two models follows. Units and Activities Units produced Model X Model Z 2,200 4,400 Machine hours Setups Inspections Purchase orders 2,000 5,600 40 80 480 300 340 170 Per Unit Selling price per unit Model X $ 400 Model Z $ 380 Direct materials cost per unit Direct labor cost per unit 155 135 105 135 1. Compute the activity rate for each activity using activity-based costing. 2. Using activity-based costing, compute the overhead cost per unit for each model. 3. Compute the total product cost per unit for each model. 4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit). Using activity-based costing, compute the overhead cost per unit for each model. Note: Round "Activity Rate" to 2 decimal places and other answers to the nearest whole dollar amount. Overhead cost per unit-Model X Activity Activity Usage Machining Setups Inspection Purchasing Total allocated cost Units produced + Activity Rate Allocated Cost $ EA Overhead cost per unit 0 Overhead cost per unit-Model Z Activity Activity Usage Activity Rate Allocated Cost Machining Setups Inspection Purchasing Total allocated cost Units produced Overhead cost per unit $ SA 0 0 0

Cornerstones of Cost Management (Cornerstones Series)
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ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...
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Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production
processes follow.
Process
Activity
Assembly
Machining
Setups
Budgeted Cost
$ 311,400
22,000
$ 333,400
Finishing
Inspecting
$ 226,000
Support
Purchasing
$ 134,000
Budgeted
Activity
Activity Cost Driver
Machine hours (MH)
Usage
7,600
Setups
120
Inspections
780
Purchase orders
510
Additional production information concerning its two models follows.
Units and Activities
Units produced
Model X
Model Z
2,200
4,400
Machine hours
Setups
Inspections
Purchase orders
2,000
5,600
40
80
480
300
340
170
Per Unit
Selling price per unit
Model X
$ 400
Model Z
$ 380
Direct materials cost per unit
Direct labor cost per unit
155
135
105
135
1. Compute the activity rate for each activity using activity-based costing.
2. Using activity-based costing, compute the overhead cost per unit for each model.
3. Compute the total product cost per unit for each model.
4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).
Transcribed Image Text:Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Activity Assembly Machining Setups Budgeted Cost $ 311,400 22,000 $ 333,400 Finishing Inspecting $ 226,000 Support Purchasing $ 134,000 Budgeted Activity Activity Cost Driver Machine hours (MH) Usage 7,600 Setups 120 Inspections 780 Purchase orders 510 Additional production information concerning its two models follows. Units and Activities Units produced Model X Model Z 2,200 4,400 Machine hours Setups Inspections Purchase orders 2,000 5,600 40 80 480 300 340 170 Per Unit Selling price per unit Model X $ 400 Model Z $ 380 Direct materials cost per unit Direct labor cost per unit 155 135 105 135 1. Compute the activity rate for each activity using activity-based costing. 2. Using activity-based costing, compute the overhead cost per unit for each model. 3. Compute the total product cost per unit for each model. 4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).
Using activity-based costing, compute the overhead cost per unit for each model.
Note: Round "Activity Rate" to 2 decimal places and other answers to the nearest whole dollar amount.
Overhead cost per unit-Model X
Activity
Activity Usage
Machining
Setups
Inspection
Purchasing
Total allocated cost
Units produced
+
Activity Rate
Allocated Cost
$
EA
Overhead cost per unit
0
Overhead cost per unit-Model Z
Activity
Activity Usage
Activity Rate
Allocated Cost
Machining
Setups
Inspection
Purchasing
Total allocated cost
Units produced
Overhead cost per unit
$
SA
0
0
0
Transcribed Image Text:Using activity-based costing, compute the overhead cost per unit for each model. Note: Round "Activity Rate" to 2 decimal places and other answers to the nearest whole dollar amount. Overhead cost per unit-Model X Activity Activity Usage Machining Setups Inspection Purchasing Total allocated cost Units produced + Activity Rate Allocated Cost $ EA Overhead cost per unit 0 Overhead cost per unit-Model Z Activity Activity Usage Activity Rate Allocated Cost Machining Setups Inspection Purchasing Total allocated cost Units produced Overhead cost per unit $ SA 0 0 0
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