Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage Assembly Machining $ 310,200 Machine hours (MH) 7,200 Setups 26,000 Setups 60 $ 336,200 Finishing Inspecting $ 222,000 Inspections 740 Support Purchasing $ 136,000 Purchase orders 540 Additional production information concerning its two models follows. Units and Activities Model X Model Z Units produced 1,800 3,600 Machine hours 2,200 5,000 Setups 20 40 Inspections 500 240 Purchase orders 360 180 Per Unit Model X Model Z Selling price per unit $ 410 $ 390 Direct materials cost per unit 155 115 Direct labor cost per unit 130 145 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).
Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage Assembly Machining $ 310,200 Machine hours (MH) 7,200 Setups 26,000 Setups 60 $ 336,200 Finishing Inspecting $ 222,000 Inspections 740 Support Purchasing $ 136,000 Purchase orders 540 Additional production information concerning its two models follows. Units and Activities Model X Model Z Units produced 1,800 3,600 Machine hours 2,200 5,000 Setups 20 40 Inspections 500 240 Purchase orders 360 180 Per Unit Model X Model Z Selling price per unit $ 410 $ 390 Direct materials cost per unit 155 115 Direct labor cost per unit 130 145 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).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 | Budgeted Cost | Activity Cost Driver | Budgeted Activity Usage |
|---|---|---|---|---|
| Assembly | Machining | $ 310,200 | Machine hours (MH) | 7,200 |
| Setups | 26,000 | Setups | 60 | |
| $ 336,200 | ||||
| Finishing | Inspecting | $ 222,000 | Inspections | 740 |
| Support | Purchasing | $ 136,000 | Purchase orders | 540 |
Additional production information concerning its two models follows.
| Units and Activities | Model X | Model Z |
|---|---|---|
| Units produced | 1,800 | 3,600 |
| Machine hours | 2,200 | 5,000 |
| Setups | 20 | 40 |
| Inspections | 500 | 240 |
| Purchase orders | 360 | 180 |
| Per Unit | Model X | Model Z |
|---|---|---|
| Selling price per unit | $ 410 | $ 390 |
| Direct materials cost per unit | 155 | 115 |
| Direct labor cost per unit | 130 | 145 |
1. Compute the activity rate for each activity using activity-based costing.
2. Using activity-based costing, compute the
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:Determine product cost per unit for each of the two products using activity-based costing. (Round intermediate calculations
and final answers to 2 decimal places.)
Per Unit
Rounded Edge
Squared Edge
Direct Materials
Direct Labor
< Required 2
Overhead
Product Cost per Unit
Required 3 >
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