Answered: Perdon Corporation manufactures…

Name: Perdon Corporation manufactures safes—large mobile safes, and large wa
Uploaded: 2024-03-20T06:33:06.000Z
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Description: Perdon Corporation manufactures safes—large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amoun

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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Perdon Corporation manufactures safes—large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead.

	Mobile Safes	Walk-in Safes
Units planned for production	200	50
Material moves per product line	300	200
Purchase orders per product line	450	350
Direct labor hours per product line	800	1,700

The total estimated manufacturing overhead was $272,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.)

(1)		One mobile safe		$enter a dollar amount per unit rounded to 2 decimal places	per unit
(2)		One walk-in safe		$enter a dollar amount per unit rounded to 2 decimal places	per unit

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The total estimated manufacturing overhead of $272,000 was comprised of $164,000 for materials handling costs and $108,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, e.g. 12.25.)

What amount of materials handling costs are assigned to:

(a)		One mobile safe		$enter a dollar amount per unit rounded to 2 decimal places	per unit
(b)		One walk-in safe		$enter a dollar amount per unit rounded to 2 decimal places	per unit

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(a)		One mobile safe		$enter a dollar amount per unit rounded to 2 decimal places	per unit
(b)		One walk-in safe		$enter a dollar amount per unit rounded to 2 decimal places	per unit

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Compare the amount of overhead allocated to one mobile safe and to one walk-in safe under the traditional costing approach versus under ABC. (Round answers to 2 decimal places, e.g. 12.25.)

	Traditional Costing	Activity-Based Costing
Mobile safe	$enter a dollar amount rounded to 2 decimal places	$enter a dollar amount rounded to 2 decimal places
Walk-in safe	$enter a dollar amount rounded to 2 decimal places	$enter a dollar amount rounded to 2 decimal places

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