Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Direct materials Direct labor Overhead (using plantwide rate) Total product cost Units produced Product cost per unit Activity Purchasing Depreciation of machinery Rounded Edge Squared Edge $ 39,600 $ 51,600 13,200 46,200 $99,000 13,200 $7.50 Setup Total Northwest's controller wants to apply activity-based costing to allocate the $133,600 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. 34,400 87,400 $ 173,400 17,200 $10.08 Budgeted Cost $ 7,000 69,400 57,200 $ 133,600 Total $91,200 47,600 133,600 $ 272,400 Activity Cost Driver Purchase orders Machine hours Setups Rounded Edge 189 orders 500 hours 40 setups 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. Activity Usage Squared Edge 511 orders 1,500 hours 210 setups Total 700 orders 2,000 hours 250 setups
Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Direct materials Direct labor Overhead (using plantwide rate) Total product cost Units produced Product cost per unit Activity Purchasing Depreciation of machinery Rounded Edge Squared Edge $ 39,600 $ 51,600 13,200 46,200 $99,000 13,200 $7.50 Setup Total Northwest's controller wants to apply activity-based costing to allocate the $133,600 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. 34,400 87,400 $ 173,400 17,200 $10.08 Budgeted Cost $ 7,000 69,400 57,200 $ 133,600 Total $91,200 47,600 133,600 $ 272,400 Activity Cost Driver Purchase orders Machine hours Setups Rounded Edge 189 orders 500 hours 40 setups 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. Activity Usage Squared Edge 511 orders 1,500 hours 210 setups Total 700 orders 2,000 hours 250 setups
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Transcribed Image Text:Exercise 17-19 (Algo) Activity-based costing to compute activity rates, overhead cost per unit, and
product cost per unit LO P3
Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost
data.
Direct materials
Direct labor
Overhead (using plantwide rate)
Total product cost
Units produced
Product cost per unit
Activity
Purchasing
Depreciation of machinery
Setup
Total
Northwest's controller wants to apply activity-based costing to allocate the $133,600 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 Squared Edge
$ 39,600
$ 51,600
34,400
87,400
$ 173,400
17,200
$ 10.08
13,200
46,200
$ 99,000
Per Unit
Rounded Edge
Squared Edge
13, 200
$7.50
Budgeted Cost
$ 7,000
69,400
57, 200
$ 133,600
Required 3
Direct Materials
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.
Total
$91,200
47,600
133,600
$ 272,400
Activity Cost Driver
Purchase orders
Machine hours
Setups
Required 1 Required 2
Determine product cost per unit for each of the two products using activity-based costing. (Round intermediate calculations
and final answers to 2 decimal places.)
Direct Labor
< Required 2
Overhead
Rounded Edge
189 orders
500 hours
40 setups
Product Cost per Unit
Required 3 >
Activity Usage
Squared Edge
511 orders
1,500 hours
210 setups
Total
700 orders
2,000 hours
250 setups
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