**Title: Understanding Replacement Fittings Production Costs at Jamesway Corporation****Introduction**Jamesway Corporation specializes in the production of replacement fittings for heavy construction equipment, focusing on screws and bolts. This section provides detailed information on the production activities and cost allocation using Activity-Based Costing (ABC).**Production Data**- **Screws:** - Direct Labour Hours per Unit: 0.20 - Annual Production: 40,000 units - **Bolts:** - Direct Labour Hours per Unit: 0.10 - Annual Production: 60,000 units**Additional Company Information**- **Material Costs:** - Screws require $8.70 in direct materials per unit. - Bolts require $6.70 in direct materials per unit.- **Labour Wage:** - The direct labour wage rate is $20 per hour.- **Production Complexity:** - Screws are more complex to manufacture than bolts, necessitating special equipment.**Activity-Based Costing (ABC) Pools**Jamesway Corporation has established the following activity cost pools to allocate overhead costs more accurately:1. **Machine Setups** - **Activity Measure:** Number of setups - **Estimated Overhead Cost:** $26,400 - **Activity:** - Screws: 40 setups - Bolts: 80 setups - Total Activity: 120 setups 2. **Special Processing** - **Activity Measure:** Machine-hours - **Estimated Overhead Cost:** $215,000 - **Activity:** - Screws: 4,000 machine-hours - Bolts: 14,000 machine-hours - Total Activity: 18,000 machine-hours 3. **General Factory** - **Activity Measure:** Direct labour-hours - **Estimated Overhead Cost:** $504,000 - **Activity:** - Screws: 7,000 direct labour-hours - Bolts: 14,000 direct labour-hours - Total Activity: 21,000 direct labour-hours**Task Requirement**1. **Compute the Activity Rate for Each Cost Pool** - Determine the cost per activity unit to allocate overhead appropriately.**Activity Cost Pool Summary**- **Machine Setups:** Calculate cost per setup- **Special Processing:** Calculate cost per machine-hour- ** **2. Determine the unit cost of each product according to the ABC system, including direct materials and direct labour. (Round your answers to 2 decimal places.)**| | Screws | Bolts ||----------------|--------|-------|| Direct materials | | || Direct labour | | || Overhead | | || Unit cost | | |The table above provides a framework for calculating the unit cost of screws and bolts using Activity-Based Costing (ABC). Fill in the columns with direct materials, direct labour, and overhead to find the total unit cost.

Activity rate – it is the rate of an activity in an activity cost pool which is used as a basis for…

Jamesway Corporation makes two types of replacement fittings for heavy construction equipment-screws and bolts. Dat the two products follow: Screws Bolts Direct Labour- Hours per Unit Annual Production 0.20 0.10 Additional information about the company follows: 40,000 units 60,000 units a. Screws require $8.70 in direct materials per unit, and bolts require $6.70. b. The direct labour wage rate is $20 per hour. c. Screws are more complex to manufacture than bolts, and they require special equipment. d. The ABC system has the following activity cost pools: Activity Cost Pool. Machine setups Special processing General factory Activity Cost Pool Machine setups Activity Measure. Number of setups Machine-hours Direct labour-hours. Required: 1. Compute the activity rate for each activity cost pool. Activity Rate per setup Estimated Overhead Cost Screws $ 26,400 $216,000 $504,000 80 4,000 7,000 Activity Bolts 40 0 14,000 Total 120 4,000 21,000

Jamesway Corporation makes two types of replacement fittings for heavy construction equipment-screws and bolts. Dat the two products follow: Screws Bolts Direct Labour- Hours per Unit Annual Production 0.20 0.10 Additional information about the company follows: 40,000 units 60,000 units a. Screws require $8.70 in direct materials per unit, and bolts require $6.70. b. The direct labour wage rate is $20 per hour. c. Screws are more complex to manufacture than bolts, and they require special equipment. d. The ABC system has the following activity cost pools: Activity Cost Pool. Machine setups Special processing General factory Activity Cost Pool Machine setups Activity Measure. Number of setups Machine-hours Direct labour-hours. Required: 1. Compute the activity rate for each activity cost pool. Activity Rate per setup Estimated Overhead Cost Screws $ 26,400 $216,000 $504,000 80 4,000 7,000 Activity Bolts 40 0 14,000 Total 120 4,000 21,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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