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II. Wongtien Electronics Corp. in Hong Kong, SAR, China, manufactures tablets, laptops and desktop PCs. Wongtien currently operates a standard absorption costing system. Budgeted information for next year is given below (currency in one thousand Hong Kong Dollars, HK$000): Desktop PCs 9,880 2,200 800 Total 26,000 5,800 2,300 Products Sales revenue Tablets 3,640 Laptops 12,480 2,800 Direct material 800 wwm Direct labor 300 Fixed production 1,456 1,084 992 3.488 overheads 3,952 2,928 10,400 7,500 Gross profit Fixed production overheads are currently absorbed based on a percentage of sales revenue. Wongtien is considering changing to an activity-based costing system. The main activities and their associated cost drivers and overhead cost have been identified as follows: Cost driver Production overhead cost Activity Manufacturing scheduling wNumber of orders Parts handling Assembly Software installation and testing Packaging 162 Number of parts Assembly time Number of software applications Number of units 2,464 4,472 2,000 1,302 10,400 Further details have also been ascertained as follows: Desktop PCs 6,000 Tablets Laptops 12,000 Budgeted production for next year (units). 10,000 Average number of units per order Number of parts per unit Assembly time per unit (minutes). Number of software applications per unit. 10 6 4 20 35 25 20 40 30 3 4

II. Wongtien Electronics Corp. in Hong Kong, SAR, China, manufactures tablets, laptops and desktop PCs. Wongtien currently operates a standard absorption costing system. Budgeted information for next year is given below (currency in one thousand Hong Kong Dollars, HK$000): Desktop PCs 9,880 2,200 800 Total 26,000 5,800 2,300 Products Sales revenue Tablets 3,640 Laptops 12,480 2,800 Direct material 800 wwm Direct labor 300 Fixed production 1,456 1,084 992 3.488 overheads 3,952 2,928 10,400 7,500 Gross profit Fixed production overheads are currently absorbed based on a percentage of sales revenue. Wongtien is considering changing to an activity-based costing system. The main activities and their associated cost drivers and overhead cost have been identified as follows: Cost driver Production overhead cost Activity Manufacturing scheduling wNumber of orders Parts handling Assembly Software installation and testing Packaging 162 Number of parts Assembly time Number of software applications Number of units 2,464 4,472 2,000 1,302 10,400 Further details have also been ascertained as follows: Desktop PCs 6,000 Tablets Laptops 12,000 Budgeted production for next year (units). 10,000 Average number of units per order Number of parts per unit Assembly time per unit (minutes). Number of software applications per unit. 10 6 4 20 35 25 20 40 30 3 4

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 9E: Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost...
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II. Wongtien Electronics Corp. in Hong Kong, SAR, China, manufactures tablets, laptops and desktop PCs. Wongtien currently operates a standard absorption costing system. Budgeted information for next year is given below (currency in one thousand Hong Kong Dollars, HK$000): Desktop PCs 9,880 2,200 800 Products Sales revenue Tablets 3,640 800 300 Laptops 12,480 2,800 Total 26,000 5,800 2,300 Direct material Direct labor Fixed production overheads 1,456 1,084 4.992 3.488 3,952 2,928 10,400 7,500 Gross profit Fixed production overheads are currently absorbed based on a percentage of sales revenue. Wongtien is considering changing to an activity-based costing system. The main activities and their associated cost drivers and overhead cost have been identified as follows: Cost driver Production overhead cost Activity Manufacturing scheduling wNumber of orders Parts handling Assembly Software installation and testing Packaging 162 Number of parts Assembly time wNumber of software applications Number of units 2,464 4,472 2,000 1,302 10,400 Further details have also been ascertained as follows: Desktop PCs 6,000 4 Tablets Laptops 12,000 Budgeted production for next year (units). 10,000 Average number of units per order Number of parts per unit Assembly time per unit (minutes)n Number of software applications per unit. 10 20 35 25 20 40 30 3 4 Instructions
Transcribed Image Text:II. Wongtien Electronics Corp. in Hong Kong, SAR, China, manufactures tablets, laptops and desktop PCs. Wongtien currently operates a standard absorption costing system. Budgeted information for next year is given below (currency in one thousand Hong Kong Dollars, HK$000): Desktop PCs 9,880 2,200 800 Products Sales revenue Tablets 3,640 800 300 Laptops 12,480 2,800 Total 26,000 5,800 2,300 Direct material Direct labor Fixed production overheads 1,456 1,084 4.992 3.488 3,952 2,928 10,400 7,500 Gross profit Fixed production overheads are currently absorbed based on a percentage of sales revenue. Wongtien is considering changing to an activity-based costing system. The main activities and their associated cost drivers and overhead cost have been identified as follows: Cost driver Production overhead cost Activity Manufacturing scheduling wNumber of orders Parts handling Assembly Software installation and testing Packaging 162 Number of parts Assembly time wNumber of software applications Number of units 2,464 4,472 2,000 1,302 10,400 Further details have also been ascertained as follows: Desktop PCs 6,000 4 Tablets Laptops 12,000 Budgeted production for next year (units). 10,000 Average number of units per order Number of parts per unit Assembly time per unit (minutes)n Number of software applications per unit. 10 20 35 25 20 40 30 3 4 Instructions
Direct material 800 2,800 t200 2,200 800 5,800 2,300 Direct labor 300 Fixed production 3,952 2,928 overheads 1,456 1,084 4,992 3.488 10,400 7,500 Gross profit Fixed production overheads are currently absorbed based on a percentage of sales revenue. Wongtien is considering changing to an activity-based costing system. The main activities and their associated cost drivers and overhead cost have been identified as follows: Cost driver Number of orders Number of parts Assembly time Number of software applications Number of units Production overhead cost Activity Manufacturing scheduling Parts handling Assembly Software installation and testing Packaging 162 2,464 4,472 2,000 1,302 10,400 Further details have also been ascertained as follows: Laptops Desktop PCs 6,000 4 Tablets Budgeted production for next year (units). 10,000 Average number of units per order Number of parts per unit Assembly time per unit (minutes)m Number of software applications per unit. 12,000 6 10 20 35 25 20 40 30 2 3 4 Instructions 1. Explain how the information obtained from the activity-based costing system could be used for cost management purposes.
Transcribed Image Text:Direct material 800 2,800 t200 2,200 800 5,800 2,300 Direct labor 300 Fixed production 3,952 2,928 overheads 1,456 1,084 4,992 3.488 10,400 7,500 Gross profit Fixed production overheads are currently absorbed based on a percentage of sales revenue. Wongtien is considering changing to an activity-based costing system. The main activities and their associated cost drivers and overhead cost have been identified as follows: Cost driver Number of orders Number of parts Assembly time Number of software applications Number of units Production overhead cost Activity Manufacturing scheduling Parts handling Assembly Software installation and testing Packaging 162 2,464 4,472 2,000 1,302 10,400 Further details have also been ascertained as follows: Laptops Desktop PCs 6,000 4 Tablets Budgeted production for next year (units). 10,000 Average number of units per order Number of parts per unit Assembly time per unit (minutes)m Number of software applications per unit. 12,000 6 10 20 35 25 20 40 30 2 3 4 Instructions 1. Explain how the information obtained from the activity-based costing system could be used for cost management purposes.
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