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Jamesway Corporation makes two types of replacement fittings for heavy construction equipment-screws and bolts. Data regarding the two products follow: Screws Bolts Direct Labour- Hours per Unit Annual Production 0.20 40,000 units 0.10 60,000 units Additional information about the company follows: a. Screws require $8.10 in direct materials per unit, and bolts require $6.10. b. The direct labour wage rate is $30 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 Required: 1. Compute the activity rate for each activity cost pool. Activity Cost Pool Machine setups Special processing General factory Direct materials Direct labour Overhead Unit cost Activity Measure Number of setups Machine-hours Direct labour-hours Screws Activity Rate per setup per MH per DLH Estimated Overhead Cost $ 19,200 $168,000 $252,000 Bolts Activity Bolts 40 Screws 80 4,000 7,000 14,000 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.) Total 120 4,000 21,000

Jamesway Corporation makes two types of replacement fittings for heavy construction equipment-screws and bolts. Data regarding the two products follow: Screws Bolts Direct Labour- Hours per Unit Annual Production 0.20 40,000 units 0.10 60,000 units Additional information about the company follows: a. Screws require $8.10 in direct materials per unit, and bolts require $6.10. b. The direct labour wage rate is $30 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 Required: 1. Compute the activity rate for each activity cost pool. Activity Cost Pool Machine setups Special processing General factory Direct materials Direct labour Overhead Unit cost Activity Measure Number of setups Machine-hours Direct labour-hours Screws Activity Rate per setup per MH per DLH Estimated Overhead Cost $ 19,200 $168,000 $252,000 Bolts Activity Bolts 40 Screws 80 4,000 7,000 14,000 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.) Total 120 4,000 21,000

FINANCIAL ACCOUNTING
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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Jamesway Corporation manufactures two types of replacement fittings for heavy construction equipment—screws and bolts. The data for the two products are as follows: ### Direct Labour: - **Screws**: 0.20 hours per unit, Annual Production: 40,000 units - **Bolts**: 0.10 hours per unit, Annual Production: 60,000 units ### Additional Company Information: - a. Screws require $8.10 in direct materials per unit, and bolts require $6.10. - b. The direct labour wage rate is $30 per hour. - c. Screws are more complex to manufacture than bolts and require special equipment. - d. The ABC system has the following activity cost pools: | Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Activity | Screws | Bolts | Total | |----------------------|---------------------------------|-------------------------|--------------|--------|-------|-------| | Machine setups | Number of setups | $19,200 | | 80 | 40 | 120 | | Special processing | Machine-hours | $168,000 | | 4,000 | 0 | 4,000 | | General factory | Direct labour-hours | $252,000 | | 7,000 | 14,000| 21,000| ### Required: 1. Compute the activity rate for each activity cost pool. | Activity Cost Pool | Activity Rate | |---------------------|---------------| | Machine setups | per setup | | Special processing | per MH | | General factory | per DLH | 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 | | |
Transcribed Image Text:Jamesway Corporation manufactures two types of replacement fittings for heavy construction equipment—screws and bolts. The data for the two products are as follows: ### Direct Labour: - **Screws**: 0.20 hours per unit, Annual Production: 40,000 units - **Bolts**: 0.10 hours per unit, Annual Production: 60,000 units ### Additional Company Information: - a. Screws require $8.10 in direct materials per unit, and bolts require $6.10. - b. The direct labour wage rate is $30 per hour. - c. Screws are more complex to manufacture than bolts and require special equipment. - d. The ABC system has the following activity cost pools: | Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Activity | Screws | Bolts | Total | |----------------------|---------------------------------|-------------------------|--------------|--------|-------|-------| | Machine setups | Number of setups | $19,200 | | 80 | 40 | 120 | | Special processing | Machine-hours | $168,000 | | 4,000 | 0 | 4,000 | | General factory | Direct labour-hours | $252,000 | | 7,000 | 14,000| 21,000| ### Required: 1. Compute the activity rate for each activity cost pool. | Activity Cost Pool | Activity Rate | |---------------------|---------------| | Machine setups | per setup | | Special processing | per MH | | General factory | per DLH | 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 | | |
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