**Problem 5-14A (Algo) Comparing an ABC System with a Traditional Costing System LO 5-1, 5-2, 5-3**Adams Electronics produces video games in three market categories: commercial, home, and miniature. Adams has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers:| Total Pooled Cost | Types of Costs | Cost Driver ||-------------------|------------------------------------------------------------------|------------------------------------------|| **Unit** $364,000 | Indirect labor wages, supplies, factory utilities, machine maintenance | Machine hours || **Batch** 197,400 | Materials handling, inventory storage, labor for setups, packaging, labeling, and shipping, scheduling | Number of production orders || **Product** 106,600 | Research and development | Time spent by research department || **Facility** 301,000 | Rent, general utilities, maintenance, facility depreciation, admin. salaries | Square footage |**Additional data for each of the product lines follow:**| | Commercial | Home | Miniature | Total ||-------------------------------------------|------------|-------|-----------|--------|| Direct materials cost | $ 25.01/unit | $ 15.01/unit | $ 12.01/unit | — || Direct labor cost | $ 10.05/hour | $ 8.05/hour | $ 9.05/hour | — || Number of labor hours | 6,000 | 12,000 | 2,000 | 20,000 || Number of machine hours | 10,000 | 45,000 | 25,000 | 80,000 || Number of production orders | 200 | 2,000 | 800 | 3,000 || Research and development time | 10% | 20% | 70% | 100% || Number of units | 15,000 | 45,000 | 14,000 | 74,000 || Square footage | 20,000 | 50,

Name: **Problem 5-14A (Algo) Comparing an ABC System with a Traditional Cos
Uploaded: 2024-03-20T06:32:49.000Z
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Description: **Problem 5-14A (Algo) Comparing an ABC System with a Traditional Costing System LO 5-1, 5-2, 5-3**Adams Electronics produces video games in three market categories: commercial, home, and miniature. Adams has traditionally allocated overhead costs t

Company Wide Overhead Rate :— It is calculated by dividing total estimated overhead cost by…

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Problem 5-14A (Algo) Comparing an ABC system with a traditional costing system LO 5-1, 5-2, 5-3 Adams Electronics produces video games in three market categories: commercial, home, and miniature. Adams has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Total Pooled Cost $364,000 197,400 106,600 301,000 hours Number of machine hours Number of Additional data for each of the product lines follow: Commercial Home Miniature $ 25.01/unit $ 15.01/unit $12.01/unit $ 8.05/hour $ 9.05/hour production orders Research and Direct materials cost Direct labor cost $ 10.05/hour Number of labor 6,000 10,000 development time Number of units Square footage a. Commercial Home Miniature b. Commercial Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance 200 15,000 20,000 Combined total Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Rent, general utilities, maintenance, facility depreciation, admin. salaries $ 10% Type of Product Total Cost Home Miniature Combined total $ 12,000 45,000 2,000 20% 0 45,000 50,000 0 2,000 25,000 800 70% Cost per Unit 14,000 30,000 Required a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. Total b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. (For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount.) Machine hours Number of production orders Cost Driver Time spent by research department Square footage 20,000 80,000 3,000 100% 74,000 100,000