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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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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
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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