Idris Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Activity Casting Assembly Inspecting Setup Materials handling Budgeted Activity Cost Activity Base $218,960 Machine hours 151,900 Direct labor hours 21,340 Number of inspections 50,760 Number of setups 40,740 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity Base Entry Dining Total Machine hours 5,050 4,470 9,520 Direct labor hours 4,340 6,510 10,850 Number of inspections 1,470 470 1,940 Number of setups 290 70 360 Number of loads 770 200 970 Units produced 10,000 5,000 15,000 a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Activity Casting Assembly Inspecting Setup Activity Rate per machine hour per direct labor hour per inspection per setup Materials handling per load b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent. Product Entry Lighting Fixtures Dining Room Lighting Fixtures Total Activity Cost Activity Cost Per Unit
Idris Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Activity Casting Assembly Inspecting Setup Materials handling Budgeted Activity Cost Activity Base $218,960 Machine hours 151,900 Direct labor hours 21,340 Number of inspections 50,760 Number of setups 40,740 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity Base Entry Dining Total Machine hours 5,050 4,470 9,520 Direct labor hours 4,340 6,510 10,850 Number of inspections 1,470 470 1,940 Number of setups 290 70 360 Number of loads 770 200 970 Units produced 10,000 5,000 15,000 a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. Activity Casting Assembly Inspecting Setup Activity Rate per machine hour per direct labor hour per inspection per setup Materials handling per load b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent. Product Entry Lighting Fixtures Dining Room Lighting Fixtures Total Activity Cost Activity Cost Per Unit
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:Idris Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the
fixtures. These activities and their associated budgeted activity costs and activity bases are as follows:
Activity
Casting
Assembly
Inspecting
Setup
Materials handling
Budgeted
Activity Cost
Activity Base
$218,960
Machine hours
151,900
Direct labor hours
21,340
Number of inspections
50,760
Number of setups
40,740
Number of loads
Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated
activity-base usage quantities and units produced follow:
Activity Base
Entry
Dining
Total
Machine hours
5,050
4,470
9,520
Direct labor hours
4,340
6,510
10,850
Number of inspections
1,470
470
1,940
Number of setups
290
70
360
Number of loads
770
200
970
Units produced
10,000
5,000
15,000
a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar.
Activity
Casting
Assembly
Inspecting
Setup
Activity Rate
per machine hour
per direct labor hour
per inspection
per setup
Materials handling
per load
b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product.
Round the per unit amounts to the nearest cent.
Product
Entry Lighting Fixtures
Dining Room Lighting Fixtures
Total Activity Cost
Activity Cost Per Unit
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