Question Cosgrove Company manufactures two products, Product K-7 and Product L-15. Product L-15 is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product K-7. Product L-15 is the more complex of the two products, requiring 2.0 hours of direct labor time per unit to manufacture compared to 1.0 hor of direct labor time for Product K-7. Overhead currently is applied to the products on the basis of direct labor hours. The company estimated it would incur $510,000 in manufacturing overhead costs and produce 10,000 units of Product L-15 and 50,000 units of Product K-7 during the current year. Unit costs for materials and labor are: Direct material Direct labor Product Product L- K-7 15 $11 6 $24 12 The company is considering the use of activity-based ting an alternative to its traditional costin method for manufacturing overhe Data relating to the company's activity cost pools for the current year are given below: Expected Activity Activity Cost Pool Machine setups required Purchase orders issued Machine-hours required Maintenance requests issued Estimated Overhead Product Product Costs K-7 L-15 Total 800 1,600 2,400 500 100 600 7,000 10,500 17,500 650 850 1,500 $204,000 43,500 105,000 157,500 $510,000
Question Cosgrove Company manufactures two products, Product K-7 and Product L-15. Product L-15 is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product K-7. Product L-15 is the more complex of the two products, requiring 2.0 hours of direct labor time per unit to manufacture compared to 1.0 hor of direct labor time for Product K-7. Overhead currently is applied to the products on the basis of direct labor hours. The company estimated it would incur $510,000 in manufacturing overhead costs and produce 10,000 units of Product L-15 and 50,000 units of Product K-7 during the current year. Unit costs for materials and labor are: Direct material Direct labor Product Product L- K-7 15 $11 6 $24 12 The company is considering the use of activity-based ting an alternative to its traditional costin method for manufacturing overhe Data relating to the company's activity cost pools for the current year are given below: Expected Activity Activity Cost Pool Machine setups required Purchase orders issued Machine-hours required Maintenance requests issued Estimated Overhead Product Product Costs K-7 L-15 Total 800 1,600 2,400 500 100 600 7,000 10,500 17,500 650 850 1,500 $204,000 43,500 105,000 157,500 $510,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Need help with this question
Transcribed Image Text:Question 9
Cosgrove Company manufactures two products, Product K-7 and Product L-15.
Product L-15 is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product K-7.
Product L-15 is the more complex of the two products, requiring 2.0 hours of direct labor time per unit to manufacture compared to 1.0 hour
of direct labor time for Product K-7.
Overhead currently is applied to the products on the basis of direct labor hours. The company estimated it would incur $510,000 in
manufacturing overhead costs and produce 10,000 units of Product L-15 and 50,000 units of Product K-7 during the current year.
Unit costs for materials and labor are:
Product
K-7
Direct material
Direct labor
$11
6
Product L-
15
Activity Cost Pool
Machine setups required
Purchase orders issued
Machine-hours required
Maintenance requests
issued
$24
12
The company is considering the use of activity-based costing as an alternative to its traditional costing method for manufacturing overhead.
Data relating to the company's activity cost pools for the current year are given below:
Expected Activity
Estimated
Overhead Product Product
Costs
K-7
L-15
Total
$204,000
43,500
1,600 2,400
100 600
10,500 17,500
105,000
850 1,500
157,500
$510,000
800
500
7,000
650
Transcribed Image Text:137,900
$510,000
Compute total cost per unit for Product K-7 using activity-based costing for the allocation of activity costs.
Example of Answer: 4.67 or 0.30 or 2.00 (Two decimal points. No comma, space, or $ sign)
Answer: 4.29
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education