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overhead costs for each department are allocated based on direct manufacturing labor costs of each department. 4. Explain briefly why​ plantwide, department, and​ activity-based costing systems show different costs for the basic and deluxe trophies. Which system would you r

overhead costs for each department are allocated based on direct manufacturing labor costs of each department. 4. Explain briefly why​ plantwide, department, and​ activity-based costing systems show different costs for the basic and deluxe trophies. Which system would you r

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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3.
Calculate the budgeted unit cost of basic and deluxe trophies if
Acclaim
allocates overhead costs in each department using​ activity-based costing, where setup costs are allocated based on number of batches and general overhead costs for each department are allocated based on direct manufacturing labor costs of each department.
4.
Explain briefly why​ plantwide, department, and​ activity-based costing systems show different costs for the basic and deluxe trophies. Which system would you recommend and​ why?
The controller has asked you to compare plantwide, department, and activity-based cost allocation. Acclaim Budgeted Information for the Year Ended November 30, 2020 Forming Department Basic Deluxe Total Direct materials $ 37,700 $ 21,500 $ 59,200 Direct manufacturing labor 31,200 15,300 46,500 Overhead costs: Set up 7,440 Overhead costs: General overhead 34,410 Assembly Department Basic Deluxe Total Direct materials 4,800 $ 15,200 $ 20,000 Direct manufacturing labor 15,300 14,700 30,000 Overhead costs: General overhead 36,000
Transcribed Image Text:The controller has asked you to compare plantwide, department, and activity-based cost allocation. Acclaim Budgeted Information for the Year Ended November 30, 2020 Forming Department Basic Deluxe Total Direct materials $ 37,700 $ 21,500 $ 59,200 Direct manufacturing labor 31,200 15,300 46,500 Overhead costs: Set up 7,440 Overhead costs: General overhead 34,410 Assembly Department Basic Deluxe Total Direct materials 4,800 $ 15,200 $ 20,000 Direct manufacturing labor 15,300 14,700 30,000 Overhead costs: General overhead 36,000
Acclaim Inc. makes two styles of trophies, basic and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce 10,000 basic trophies and 5,000 deluxe trophies. Manufacturing takes place in two production departments: forming and assembly. In the forming department, indirect manufacturing costs are accumulated in two cost pools, set up and general overhead. In the assembly department, all indirect manufacturing costs are accumulated in one general overhead cost pool. The basic trophies are formed in batches of 200 but because of the more intricate detail of the deluxe trophies, they are formed in batches of 50. |(Click the icon to view budgeted information.) Read the requirements. include direct material and direct manufacturing labor cost in your unit cost calculation.) Start by calculating the total direct costs for the basic and deluxe trophies departments. Basic Deluxe Total Direct materials Forming $ 37,700 $ 21,500 $ 59,200 Assembly 4,800 15,200 20,000 Total direct materials 42,500 36,700 79,200 Direct manufacturing labor Forming 31,200 15,300 46,500 15,300 14,700 30,000 Assembly 46,500 30,000 76,500 Total direct manufacturing labor $ 89,000 $ 66,700 $ 155,700 Total direct costs %24
Transcribed Image Text:Acclaim Inc. makes two styles of trophies, basic and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce 10,000 basic trophies and 5,000 deluxe trophies. Manufacturing takes place in two production departments: forming and assembly. In the forming department, indirect manufacturing costs are accumulated in two cost pools, set up and general overhead. In the assembly department, all indirect manufacturing costs are accumulated in one general overhead cost pool. The basic trophies are formed in batches of 200 but because of the more intricate detail of the deluxe trophies, they are formed in batches of 50. |(Click the icon to view budgeted information.) Read the requirements. include direct material and direct manufacturing labor cost in your unit cost calculation.) Start by calculating the total direct costs for the basic and deluxe trophies departments. Basic Deluxe Total Direct materials Forming $ 37,700 $ 21,500 $ 59,200 Assembly 4,800 15,200 20,000 Total direct materials 42,500 36,700 79,200 Direct manufacturing labor Forming 31,200 15,300 46,500 15,300 14,700 30,000 Assembly 46,500 30,000 76,500 Total direct manufacturing labor $ 89,000 $ 66,700 $ 155,700 Total direct costs %24
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