nes
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter18: Activity-based Costing
Section: Chapter Questions
Problem 3CMA: Young Company is beginning operations and is considering three alternatives to allocate...
Related questions
Question
![Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually
produces 58,000 units of EX300 and 12,300 units of TX500. The company's conventional cost system allocates manufacturing
overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to
the company's two product lines is shown below:
Direct materials.
Direct labor
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
EX300
$364,325
$ 118,000
The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four
activities as shown below:
Setups (setup hours).
Product-level (number of products)
*
General factory (direct labor dollars).
Total manufacturing overhead cost
Show Transcribed Text
TX500
$ 160,550
$ 41,500
Complete this question by entering your answers in the tabs below.
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
Setups (setup hours)
Product-level (number of products)
General factory (direct labor dollars)
Total manufacturing overhead cost
Req 1A
Manufacturing
Overhead
$ 209,300
131, 100
83,870
54,230
$ 478,500
Req 1B
Required:
1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system.
1-b. Using the plantwide rate, compute the unit product cost for each product.
2-a. Compute the activity rate for each activity cost pool.
2-b. Using the activity rates, compute the unit product cost for each product.
Req 2A
Total
$ 524,875
$ 159,500
Complete this question by entering your answers in the tabs baiow.
Req 2B
EX300
88,000
65
1
$ 118,000
per DL$
< Reg 1A
Manufacturing
Overhead
$ 209,300
131, 100
83,870
54,230
$ 478,500
Activity
TX500
61,500
280
1
$ 41,500
Required:
1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system.
1-b. Using the plantwide rate, compute the unit product cost for each product.
2-a. Compute the activity rate for each activity cost pool.
2-b. Using the activity rates, compute the unit product cost for each product.
EX300
88,000
65
1
$ 118,000
Total
149,500
345
2
$ 159,500
Req 1B >
Activity
TX500
61,500
280
1
$ 41,500
Compute the plantwide overhead rate that would be used in the company's conventional cost system. (Round your answer to
2 decimal places.)
Predetermined overhead rate
Total
149,500
345
2
$ 159,500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F434cdd0f-a152-4b30-bfcd-0b3c9459ca88%2Ffc8c4187-fb1d-472e-9d9b-ce12104f9ee5%2F9cs6kc_processed.png&w=3840&q=75)
Transcribed Image Text:Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually
produces 58,000 units of EX300 and 12,300 units of TX500. The company's conventional cost system allocates manufacturing
overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to
the company's two product lines is shown below:
Direct materials.
Direct labor
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
EX300
$364,325
$ 118,000
The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four
activities as shown below:
Setups (setup hours).
Product-level (number of products)
*
General factory (direct labor dollars).
Total manufacturing overhead cost
Show Transcribed Text
TX500
$ 160,550
$ 41,500
Complete this question by entering your answers in the tabs below.
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
Setups (setup hours)
Product-level (number of products)
General factory (direct labor dollars)
Total manufacturing overhead cost
Req 1A
Manufacturing
Overhead
$ 209,300
131, 100
83,870
54,230
$ 478,500
Req 1B
Required:
1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system.
1-b. Using the plantwide rate, compute the unit product cost for each product.
2-a. Compute the activity rate for each activity cost pool.
2-b. Using the activity rates, compute the unit product cost for each product.
Req 2A
Total
$ 524,875
$ 159,500
Complete this question by entering your answers in the tabs baiow.
Req 2B
EX300
88,000
65
1
$ 118,000
per DL$
< Reg 1A
Manufacturing
Overhead
$ 209,300
131, 100
83,870
54,230
$ 478,500
Activity
TX500
61,500
280
1
$ 41,500
Required:
1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system.
1-b. Using the plantwide rate, compute the unit product cost for each product.
2-a. Compute the activity rate for each activity cost pool.
2-b. Using the activity rates, compute the unit product cost for each product.
EX300
88,000
65
1
$ 118,000
Total
149,500
345
2
$ 159,500
Req 1B >
Activity
TX500
61,500
280
1
$ 41,500
Compute the plantwide overhead rate that would be used in the company's conventional cost system. (Round your answer to
2 decimal places.)
Predetermined overhead rate
Total
149,500
345
2
$ 159,500
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