Pronghorn Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Information is presented below:Activity Cost PoolsOrdering and ReceivingMachine SetupMachiningAssemblyInspectionBudgetCost Driver$OrdersDeluxe $SetupsMachine hoursPartsInspectionsOverhead cost per unitEst. Overhead$143,000per unit309,6001,022,000per unit1,622,000313,000Est. Use of Cost DriversBudget600500150,0001,200,000550DeluxeCompute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. (Round per machine hour and per part values to 3 decimal places, eg.52.711. Round overhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to 0 decimal places, e.g. 2,500.)400400100,000800,000450SUPPO

ACTIVITY COSTING Activity costing is one of the powerful tools for measuring performance. Activity based costing is used to identify, describe, assign cost to, & Report on agency operations.ABC System calculates the cost of individual activities & Assign costs to cost objects such as Product & Services on the basis of the activities undertaken to produce each product or service. Working Note #1 :— Computation of Activity RatesActivity Cost PoolsEst. OH ACost DriversBActivity Rates(A ÷ B)Ordering & Receiving $143,000Order(600+400)1,000$143Machine Setup $309,600Setup(500+400)900$344Machining $1,022,000Machine Hour (150,000+100,000)250,000$4.088Assembly $1,622,000Parts (1,200,000+800,000)2,000,000$0.811Inspection $313,000Inspection (550+450)1,000$313Requirement #1 :— Computation of Overhead Cost Per Unit For Each Product.Budget Deluxe Ordering & Receiving($143*600)$85,800($143*400)$57,200Machine Setup ($344*500)$172,000($344*400)$137,600Machining($4.088*150,000)$613,200 ($4.088*100,000)$408,800Assembly ($0.811*1,200,000)$973,200($0.811*800,000)$648,800Inspection($313*550)$172,150($313*450)$140,850TOTAL$2,016,350$1,393,250Production 700,000200,000Overhead Cost Per Unit($2,016,350÷700,000)$2.88($1,393,250÷200,000)$6.97Overhead cost per unitBudget$ 2.88Per UnitDeluxe$ 6.97Per Unit

Business

Accounting

Pronghorn Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Information is presented below: Activity Cost Pools Ordering and Receiving Machine Setup Machining Assembly Inspection Cost Driver Orders Setups Machine hours Parts Inspections Est. Overhead $143,000 309,600 1,022,000 1,622,000 313,000 Est. Use of Cost Drivers Budget 600 500 150,000 1,200,000 550 Deluxe 400 400 100,000 800,000 450 Compute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. (Round per machine hour and per part values to 3 decimal places 52.711. Round overhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to 0 decimal places, e.g. 2,500.)

Pronghorn Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Information is presented below: Activity Cost Pools Ordering and Receiving Machine Setup Machining Assembly Inspection Cost Driver Orders Setups Machine hours Parts Inspections Est. Overhead $143,000 309,600 1,022,000 1,622,000 313,000 Est. Use of Cost Drivers Budget 600 500 150,000 1,200,000 550 Deluxe 400 400 100,000 800,000 450 Compute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. (Round per machine hour and per part values to 3 decimal places 52.711. Round overhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to 0 decimal places, e.g. 2,500.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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