Question ? Sedan1; Suv2 and Cross3. Sedan1 Suv2 Cross3 A car manufacturer assembles three types of cars at the same factory: Sedan1 Suv2 Cross3 40 50 35 Annual output Annual direct labour Hours (units) 2000 200000 1800 180000 1200 150000 The three cost drivers that generate overheads are: Deliveries to retailers - the number of deliveries of motorcycles to retail showroom Set-ups - the number of set ups Purchase orders - the number of purchase orders. The annual cost driver volumes relating to each activity and for each type of motorcycle: Number of deliveries Number of set ups Number of purchase orders 100 80 70 Selling price ($ Raw per unit) 17500 25200 35000 400 300 200 The annual overhead costs relating to these activities are as follows: Deliveries to retailers $1 150 000 (1) the existing method based upon labour hours; (ii) activity based costing. material cost (S per unit) 2600 4500 5300 Set-up costs $252 000 Purchase orders $140 000. All direct labour is paid at $8 per hour. The company holds no inventories. Calculate the total profit on each product using each of the following methods to attribute overheads:
Question ? Sedan1; Suv2 and Cross3. Sedan1 Suv2 Cross3 A car manufacturer assembles three types of cars at the same factory: Sedan1 Suv2 Cross3 40 50 35 Annual output Annual direct labour Hours (units) 2000 200000 1800 180000 1200 150000 The three cost drivers that generate overheads are: Deliveries to retailers - the number of deliveries of motorcycles to retail showroom Set-ups - the number of set ups Purchase orders - the number of purchase orders. The annual cost driver volumes relating to each activity and for each type of motorcycle: Number of deliveries Number of set ups Number of purchase orders 100 80 70 Selling price ($ Raw per unit) 17500 25200 35000 400 300 200 The annual overhead costs relating to these activities are as follows: Deliveries to retailers $1 150 000 (1) the existing method based upon labour hours; (ii) activity based costing. material cost (S per unit) 2600 4500 5300 Set-up costs $252 000 Purchase orders $140 000. All direct labour is paid at $8 per hour. The company holds no inventories. Calculate the total profit on each product using each of the following methods to attribute overheads:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Sedan1; Suv2 and Cross3.
Sedan1
Suv2
Cross3
A car manufacturer assembles three types of cars at the same factory:
Sedan1
Suv2
Cross3
Annual output Annual direct
labour Hours
(units)
2000
200000
1800
1200
40
50
35
180000
150000
Selling price ($
per unit)
17500
25200
35000
The three cost drivers that generate overheads are:
Deliveries to retailers - the number of deliveries of motorcycles to retail showrooms
Set-ups - the number of set ups
Purchase orders - the number of purchase orders.
The annual cost driver volumes relating to each activity and for each type of motorcycle:
Number of deliveries Number of set ups
Number of purchase orders
100
80
70
Raw material
cost (S per unit)
2600
400
300
200
The annual overhead costs relating to these activities are as follows:
Deliveries to retailers $1 150 000
(1) the existing method based upon labour hours;
(ii) activity based costing.
4500
5300
Set-up costs $252 000
Purchase orders $140 000.
All direct labour is paid at $8 per hour. The company holds no inventories.
Calculate the total profit on each product using each of the following methods to attribute
overheads:
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