Problem 17-3B Using activity-based costing to allocate overhead cost, and compute overhead cost per unit a gross profit per unit P3 Refer to the information in Problem 17-2B. Additional information on overhead cost follows. Activity Mixing Electricity Inspection Total Budgeted Cost $160,000 22,000 98,000 $280,000 Activity Cost Driver Direct labor hours (DLH) Machine hours (MH) Inspections Activity Cost Driver Direct labor hours (DLH) Machine hours (MH) Inspections Required 1. Compute an activity rate for each activity using activity-based costing. 2. The following actual activity usage produced 12,000 units of Extra Fine and 8,000 units of Family Style. Allocate overhead cost to Extra Fine and to Family Style and compute overhead cost per unit for each product using activity-based costing. Budgeted Activity Usage Activity Usage Extra Fine 28,000 6,000 274 40,000 10,000 490 Family Style 12,000 4,000 216 3. Compute product cost per unit for Extra Fine and for Family Style. 4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).
Problem 17-3B Using activity-based costing to allocate overhead cost, and compute overhead cost per unit a gross profit per unit P3 Refer to the information in Problem 17-2B. Additional information on overhead cost follows. Activity Mixing Electricity Inspection Total Budgeted Cost $160,000 22,000 98,000 $280,000 Activity Cost Driver Direct labor hours (DLH) Machine hours (MH) Inspections Activity Cost Driver Direct labor hours (DLH) Machine hours (MH) Inspections Required 1. Compute an activity rate for each activity using activity-based costing. 2. The following actual activity usage produced 12,000 units of Extra Fine and 8,000 units of Family Style. Allocate overhead cost to Extra Fine and to Family Style and compute overhead cost per unit for each product using activity-based costing. Budgeted Activity Usage Activity Usage Extra Fine 28,000 6,000 274 40,000 10,000 490 Family Style 12,000 4,000 216 3. Compute product cost per unit for Extra Fine and for Family Style. 4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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Can you answer the questions in 17-3B #1-4
Transcribed Image Text:Problem 17-2B Using plantwide overhead rate to allocate overhead cost, and compute overhead cost per unit
and gross profit per unit P1
Sara's Salsa produces salsa in two types: Extra Fine for restaurants and Family Style for home use. The company budgets $280,000 of
overhead cost and 40,000 direct labor hours. Additional information follows.
Per Unit (case) Selling Price
Extra Fine
Family Style
$64
53
Direct Materials
$18
16
Direct Labor
$30
25
Required
1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 40,000 direct labor hours.
2. Extra Fine uses 2 direct labor hours per unit and Family Style uses 1.5 direct labor hours per unit. Compute the overhead cost per unit
for each product.
3. Compute the product cost per unit for each product.
4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).
Transcribed Image Text:Problem 17-3B Using activity-based costing to allocate overhead cost, and compute overhead cost per unit an
gross profit per unit P3
Refer to the information in Problem 17-2B. Additional information on overhead cost follows.
Activity
Mixing
Electricity
Inspection
Total
Budgeted Cost
$160,000
22,000
98,000
$280,000
Activity Cost Driver
Direct labor hours (DLH)
Machine hours (MH)
Inspections
Activity Cost Driver
Direct labor hours (DLH)
Machine hours (MH)
Inspections
Required
1. Compute an activity rate for each activity using activity-based costing.
2. The following actual activity usage produced 12,000 units of Extra Fine and 8,000 units of Family Style. Allocate overhead cost to
Extra Fine and to Family Style and compute overhead cost per unit for each product using activity-based costing.
Budgeted Activity Usage
Activity Usage
Extra Fine
28,000
6,000
274
Family Style
40,000
10,000
490
12,000
4,000
216
3. Compute product cost per unit for Extra Fine and for Family Style.
4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).
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