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Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Rounded Edge $ 34,800 11,600 Squared Edge $ 46,800 $ 81,600 31,200 Total Direct materials Direct labor Overhead (using plantwide rate) 42,800 41,400 79,400 120,800 $ 87,800 2$ 245,200 Total product cost 157,400 Units produced Product cost per unit 11,600 $ 7.57 15,600 $ 10.09 Northwest's controller wants to apply activity-based costing to allocate the $120,800 of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The company's budgeted activity usage equals its actual activity usage for the period. The following additional information is collected. Budgeted Cost $ 6,200 Activity Cost Driver Purchase orders Activity Usage Squared Edge 471 orders Rounded Activity Purchasing Depreciation of machinery Setup Edge 149 orders Total 620 orders 63,000 Machine hours 500 hours 1,500 hours 2,000 hours 210 setups 250 setups 51,600 2$ 120,800 Setups 40 setups Total Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing.

Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Rounded Edge $ 34,800 11,600 Squared Edge $ 46,800 $ 81,600 31,200 Total Direct materials Direct labor Overhead (using plantwide rate) 42,800 41,400 79,400 120,800 $ 87,800 2$ 245,200 Total product cost 157,400 Units produced Product cost per unit 11,600 $ 7.57 15,600 $ 10.09 Northwest's controller wants to apply activity-based costing to allocate the $120,800 of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The company's budgeted activity usage equals its actual activity usage for the period. The following additional information is collected. Budgeted Cost $ 6,200 Activity Cost Driver Purchase orders Activity Usage Squared Edge 471 orders Rounded Activity Purchasing Depreciation of machinery Setup Edge 149 orders Total 620 orders 63,000 Machine hours 500 hours 1,500 hours 2,000 hours 210 setups 250 setups 51,600 2$ 120,800 Setups 40 setups Total Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing.

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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Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Rounded Edge $ 34,800 11,600 Squared Edge $ 46,800 $ 81,600 31,200 Total Direct materials Direct labor Overhead (using plantwide rate) 42,800 41,400 79,400 120,800 2$ 245, 200 $ Total product cost $ 87,800 157,400 Units produced Product cost per unit 11,600 $ 7.57 15,600 $ 10.09 Northwest's controller wants to apply activity-based costing to allocate the $120,800 of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The company's budgeted activity usage equals its actual activity usage for the period. The following additional information is collected. Rounded Edge 149 orders Activity Usage Squared Edge 471 orders Budgeted Cost Activity Cost Driver Purchase orders Activity Purchasing Depreciation of machinery Setup Total 620 orders $ 6,200 63,000 Machine hours 500 hours 1,500 hours 2,000 hours 51,600 40 setups 210 setups 250 setups Setups 24 Total 120,800 Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 3 Compute the activity rate for each activity using activity-based costing. (Round "Activity rate" to 2 decimal places.) Budgeted Cost Budgeted Activity Usage Activity Activity Rate Purchasing Depreciation Setup
Transcribed Image Text:Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Rounded Edge $ 34,800 11,600 Squared Edge $ 46,800 $ 81,600 31,200 Total Direct materials Direct labor Overhead (using plantwide rate) 42,800 41,400 79,400 120,800 2$ 245, 200 $ Total product cost $ 87,800 157,400 Units produced Product cost per unit 11,600 $ 7.57 15,600 $ 10.09 Northwest's controller wants to apply activity-based costing to allocate the $120,800 of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The company's budgeted activity usage equals its actual activity usage for the period. The following additional information is collected. Rounded Edge 149 orders Activity Usage Squared Edge 471 orders Budgeted Cost Activity Cost Driver Purchase orders Activity Purchasing Depreciation of machinery Setup Total 620 orders $ 6,200 63,000 Machine hours 500 hours 1,500 hours 2,000 hours 51,600 40 setups 210 setups 250 setups Setups 24 Total 120,800 Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 3 Compute the activity rate for each activity using activity-based costing. (Round "Activity rate" to 2 decimal places.) Budgeted Cost Budgeted Activity Usage Activity Activity Rate Purchasing Depreciation Setup
Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 3 Compute overhead cost per unit for each of the two products using activity-based costing. (Round "Activity Rate" to 2 decimal places and other answers to the nearest whole dollar amount.) Show less/ Overhead cost per unit–Rounded Edge Allocated Activity Activity Usage Activity Rate Cost Purchasing Depreciation Setup Total allocated cost Units produced Overhead cost per unit $ Overhead cost per unit-Squared Edge Allocated Activity Activity Usage Activity Rate Cost Purchasing Depreciation Setup Total allocated cost Units produced Overhead cost per unit $
Transcribed Image Text:Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 3 Compute overhead cost per unit for each of the two products using activity-based costing. (Round "Activity Rate" to 2 decimal places and other answers to the nearest whole dollar amount.) Show less/ Overhead cost per unit–Rounded Edge Allocated Activity Activity Usage Activity Rate Cost Purchasing Depreciation Setup Total allocated cost Units produced Overhead cost per unit $ Overhead cost per unit-Squared Edge Allocated Activity Activity Usage Activity Rate Cost Purchasing Depreciation Setup Total allocated cost Units produced Overhead cost per unit $
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