Problem 9-63 and 9-64 (Static) [The following information applies to the questions displayed below] Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Costs s 396,000 Material inspection Assembly 2,210,000 Machine-hours Production runs Equipment setup 790,000 Packaging and shipping 420,000 Units shipped Data for production of the two products at the Bayside plant for the coming year of operations follows Products Activity Drivers Direct material cost LC-20 $540,000 $ 420,000 92,125 75 240,000 Total direct material casts Total direct labor costs Total machine-hours Total number of production runs Number of units produced and shipped All direct labor at the Bayside plant is paid $35 per hour LC-50 $ 180,000 $ 210,000 46,000 50 60,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Complete this question by entering your answers in the tabs below.
Required A Required B
The intern suggests an ABC system using the cost drivers identified above. What unit product costs will be reported for the
two products if the ABC system is used?
Note: Do not round intermediate calculations
Dredt material costs
Direct labor cost
Overhead
Material inspection
Assembly
Equipment setup
Packaging and shipping
Total costs
Number of units
Unit coal
$
5
LC-20
540,000 $
540,000 $
0
LC-50
180,000
180,000
0
< Required A
Rama
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required A Required B The intern suggests an ABC system using the cost drivers identified above. What unit product costs will be reported for the two products if the ABC system is used? Note: Do not round intermediate calculations Dredt material costs Direct labor cost Overhead Material inspection Assembly Equipment setup Packaging and shipping Total costs Number of units Unit coal $ 5 LC-20 540,000 $ 540,000 $ 0 LC-50 180,000 180,000 0 < Required A Rama
Required information
Problem 9-63 and 9-64 (Static)
[The following information applies to the questions displayed below]
Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the
company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and
LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products.
The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing
systems as a way to ensure that managers had the best information available for decision making. However, rather than
update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the
Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was
formed to propose an ABC system and compare the product costs with those reported by the current system. Based on
the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company.
The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a
great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following
pools and drivers. The costs were based on the forecasts for the coming year.
Cost Pools
Material inspection
Assembly
Equipment setup
Packaging and shipping
Data for production of the two products at the Bayside plant for the coming year of operations follows:
Products
Total direct material costs
Total direct labor costs
Total machine-hours
Costs
$ 396,000
2,210,000
790,000
420,000
Activity Drivers
Direct material cost
Machine-hours
Production runs
Units shipped
$540,000
$ 420,000
92,125
75
240,000
Total number of production runs.
Number of units produced and shipped i
All direct labor at the Bayside plant is paid $35 per hour.
LC-50
$ 180,000
$ 210,000
46,000
50
60,000
Transcribed Image Text:Required information Problem 9-63 and 9-64 (Static) [The following information applies to the questions displayed below] Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Equipment setup Packaging and shipping Data for production of the two products at the Bayside plant for the coming year of operations follows: Products Total direct material costs Total direct labor costs Total machine-hours Costs $ 396,000 2,210,000 790,000 420,000 Activity Drivers Direct material cost Machine-hours Production runs Units shipped $540,000 $ 420,000 92,125 75 240,000 Total number of production runs. Number of units produced and shipped i All direct labor at the Bayside plant is paid $35 per hour. LC-50 $ 180,000 $ 210,000 46,000 50 60,000
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