Required: 1-a. Compute the predetermined overhead rate based on direct labor-hours. 1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. 2. The company is considering replacing its conventional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools: Estimated Expected Activity Total 93,200 330 Overhead Cost Activity Cost Pools and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) General factory (machine-hours) Xactive Pathbreaker $ 643,080 445,500 650,840 59,340 $1,798,760 25,200 215 68,000 115 1 1 2 1,800 6,800 8,600 Total manufacturing overhead cost Determine the activity rate for each of the four activity cost pools. 3. Using the activity rates and other data from the problem, determine the unit product cost of each product.

Required: 1-a. Compute the predetermined overhead rate based on direct labor-hours. 1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. 2. The company is considering replacing its conventional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools: Estimated Expected Activity Total 93,200 330 Overhead Cost Activity Cost Pools and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) General factory (machine-hours) Xactive Pathbreaker $ 643,080 445,500 650,840 59,340 $1,798,760 25,200 215 68,000 115 1 1 2 1,800 6,800 8,600 Total manufacturing overhead cost Determine the activity rate for each of the four activity cost pools. 3. Using the activity rates and other data from the problem, determine the unit product cost of each product.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Hagy Corporation has an activity-based costing system with three activity cost pools--Processi…

A: Activity cost pools, organizations can gain a better understanding of the cost structure, identify…

Q: INSTRUCTIONS: 1) compute the predetermined overhead rate using traditional costing with machine…

A: The objective of the question is to calculate the predetermined overhead rate using traditional…

Q: 7. Which of the four activities is a batch-level activity? O Machine setups activity O Product…

A: 1) Batch Level Activity:Batch-level activities are costs related to the production of a batch of one…

Q: Problem 3-16 (Algo) Plantwide Predetermined Overhead Rates; Pricing [LO3-1, LO3-2, LO3-3] Landen…

A: Formual used Predetermined overhead rate = Estimated overhead / Estimated direct labor hoursTotal…

Q: Required information [The following information applies to the questions displayed below.] Rusties…

A: Activity Rate :— It is the rate used to allocate manufacturing overhead cost to cost object under…

Q: Skrunchy Company produces two products, Lower and Upper. The following two tables give pertinent…

A: Calculation of cost per unit as per traditional method is as follows: Resultant table:

Q: Foam Products, Incorporated, makes foam seat cushions for the automotive and aerospace industries.…

A: Customer margin on sales is revenue from customer reduced by costs incurred with respect to that…

Q: Required information Greenwood Company manufactures two products-15,000 units of Product Y and 7,000…

A: The activity rate is calculated as the estimated overhead costs divided by the estimated base…

Q: Doede Corporation uses activity-based costing to compute product margins. In the first stage, the…

A: Activity Rate :— It is the rate used to allocate manufacturing overhead cost to cost object under…

Q: Fisher Fixtures manufactures three types of lighting fixtures, with model names of Silver, Gold, and…

A: The pre-determined Overhead rate is an allocation rate used to allocate the manufacturing overheads.…

Q: The company is considering using a two-stage cost allocation system and wants to assess the effects…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Required information [The following information applies to the questions displayed below.] Adria…

A: Labor-related activity rate = Labor related overhead cost / Direct labor-hours Purchase orders…

Q: Greenwood Company manufactures two products—15,000 units of Product Y and 7,000 units of Product Z.…

A: Plantwide overhead rate is the overall estimated overhead rate. It is determined based on the total…

Q: Deemer Corporation has an activity-based costing system with three activity cost pools--Processing,…

A: The Activity-Based Costing (ABC) is a cost allocation method that provides a more accurate way to…

Q: Product-Costing Accuracy, Plantwide and Departmental Rates, ABCEscuha Company produces two type of…

A: Hi student, Since there are multiple subparts, we will answer only first three subparts. If you want…

Q: Immen Corporation manufactures two products: Product B820 and Product P99Y. The company uses a…

A: Under plantwide overhead, the company allocates its manufacturing overhead costs using a single…

Q: Mirabile Corporation uses activity based costing to compute product margins Overhead costs have…

A: Overhead costs means all type of indirect costs and expenses being incurred in business. These costs…

Q: Wedd Corporation uses activity-based costing to assign overhead costs to products. Overhead costs…

A: ACTIVITY BASED COSTINGActivity Based Costing is a Powerful tool for measuring…

Q: Required: 1. Using direct labor-hours as the manufacturing overhead cost allocation base: a.…

A: ABC method also known as activity-based costing is a costing method that computes the total cost of…

Q: Custom's has three cost pools and an associated cost driver to allocate the costs to the product.…

A: Activity Based Costing (ABC Costing) is a method of costing which assigns overhead and Indirect…

Q: Makara Company has been using direct labor costs as the basis for assigning overhead to its many…

A: Activity-based costing (ABC) is a costing method that assigns overheads and indirect costs to…

Q: Lion Corporation uses an activity-based costing system to assign overhead costs to products. In the…

A: Steps to compute the cost of a product under Activity Based Costing:- Allocate overhead cost to…

Q: In the second stage, Machining costs are assigned to products using machine-hours (MHS) and Order…

A: ACTIVITY BASED COSTINGActivity Based Costing is a powerful tool for measuring…

Q: Chrzan, Incorporated, manufactures and sells two products: Product EO and Product NO. Data…

A: In the activity-based costing, the manufacturing overhead costs are allocated or assigned to the…

Q: Greenwood Company manufactures two products—15,000 units of Product Y and 7,000 units of Product Z.…

A: Total estimated overhead cost = Machining + Machine setup + Production design + General factory =…

Q: Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model.…

A: The question is based on the concept of Cost Accounting.

Q: Unit product cost Product C Machine setups Purchase orders $ Activity Cost Pools Order size Total…

A: Activity-based costingActivity-based costing is a system of cost accounting. Activity-based costing…

Q: Required information Skip to question Greenwood Company manufactures two products-15,000 units of…

A: Plantwide overhead rate is the overall estimated overhead rate. It is determined based on the total…

Q: Assume a company manufactures only two products—14,000 units of Product C and 6,000 units of Product…

A: Solution:

Q: Helm Corporation uses an activity-based costing system with three activity cost pools. The company…

A: Calculation of How much cost, in total, would be allocated in the first-stage allocation to the…

Q: Diehl Corporation uses an activity-based costing system with three activity cost pools. The company…

A: The indirect costs are the costs that are not related directly to the production. The indirect costs…

Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Rocky Mountain Corporation makes two types of hiking boots-Xactive and Pathbreaker. Data concerning these two product lines
appear below:
Xactive
Pathbreaker
Direct materials per unit
Direct labor cost per unit
Direct labor-hours per unit
Estimated annual production and sales
64.10
50.30
$ 17.50
1.4 DLHS
18,000 units
$ 12.30
1 DLHS
68,000 units
The company has a conventional costing system in which manufacturing overhead is applied to units based on direct labor-hours.
Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
Estimated total manufacturing overhead
$1,798,760
93, 200 DLHS
Estimated total direct labor-hours
Required:
1-a. Compute the predetermined overhead rate based on direct labor-hours.
1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product.
2. The company is considering replacing its conventional costing system with an activity-based costing system that would assign its
manufacturing overhead to the following four activity cost pools:
Estimated
Expected Activity
Pathbreaker Total
93, 200
330
Overhead Cost
Activity Cost Pools and Activity Measures
Supporting direct labor (direct labor-hours)
Batch setups (setups)
Product sustaining (number of products)
General factory (machine-hours)
Xactive
$ 643,080
445,500
650,840
59,340
$1,798,760
25, 200
215
68,000
115
1
1
2
1,800
6,800
8,600
Total manufacturing overhead cost
Determine the activity rate for each of the four activity cost pools.
3. Using the activity rates and other data from the problem, determine the unit product cost of each product.

Req 1A
Req 18
Req 2
Req 3
Compute the predetermined overhead rate based on direct labor-hours. (Round your answer to 2 decimal places.)
Predetermined overhead rate
per DLH
Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each
product. (Round your intermediate calculations and final answers to 2 decimal places.)
Xactive
Pathbreaker
Unit product cost
Req 1A
Req 18
Req 2
Req 3
Determine the activity rate for each of the four activity cost pools. (Round your "per DLH" and "per MHR" answers to 2
decimal places.)
Activity Cost Pools
Activity Rate
Supporting direct labor
per DLH
Batch setups
Product sustaining
General factory
per setup
per product
per MHR
Using the activity rates and other data from the problem, determine the unit product cost of each product. (Round your
intermediate calculations and final answers to 2 decimal places.)
Xactive
Pathbreaker
Unit product cost

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!

SEE SOLUTION Check out a sample Q&A here

Formula

VIEW

Computation of pre-determined overhead rate

VIEW

Computation of Unit product cost using traditional method

VIEW

Computation of Activity rate

VIEW

Computation of Unit product cost using Activity based costing method

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

3
Assume a company manufactures only two products-14,000 units of Product G and 6,000 units of Product H. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products G and H: Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Activity Measure Machine-hours Number of setups Number of products Product G Product H 9,000 50 1 6,000 150 1 Estimated Overhead Cost Expected Activity 15,000 MH 200 Setups $ 300,000 $ 150,000 $ 78,000 2 Products Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product H?
Please help me with show all calculation thanku
TCM Company uses activity-based costing to determine products costs for external financial reports. The company has provided the following data concerning its activity-based costing system: Activity cost pools (and activity measures) Depreciation (allocated based on machine-hours) Batch setup (allocated based on # of set ups) General Factory (allocated based on direct labor hours) Estimated Overhead costs $67,500 273,700 204,000 Expected Activity (Allocation base) Product y Product x Activity Cost pool Depreciation Batch setup General factory The activity rate for the general factory activity cost pool is? Total 5000 m hours 4000 1000 7000 set ups 3000 4000 8000 dl hours 1000 7000
Required information Greenwood Company manufactures two products-15,000 units of Product Y and 7,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z: Activity Cost Pool Machining Machine setups Production design General factory Activity Measure Machining Number of setups Number of products Direct labor-hours Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Estimated Overhead Cost $ 227,700 $ 153,908 Product Y Product Z 8,700 60 1 8,700 2,300 210 1 1,300 Expected Activity 11,000 MHS 270 setups $ 91,000. $ 257,000 2 products 10,000 DLHS 14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z? (Round your answers to 2…
Dierich Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity-based costing system: Costs: Manufacturing overhead $600,000 Selling and administrative expenses 220,000 Total $820,000 Distribution of Resource Consumption: Activity Cost Pools Order Size Customer Support Other Total Manufacturing overhead 15% 75% 10% 100% Selling and administrative expenses 60% 20% 20% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools. How much cost, in total, would be allocated in the first-stage allocation to the Order Size activity cost pool? Multiple Choice $123,000 $222,000 $307,500 $492,000
A company manufactures and sells two products: Product T8 and Product P4. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion The management of Nova Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department factory overhead rate method. The following factory overhead was budgeted for Nova: $765,000 315,000 $1,080,000 Fabrication Department factory overhead Assembly Department factory overhead Total Direct labor hours were estimated as follows: Fabrication Department Assembly Department Total In addition, the direct labor hours (dlh) used to produce a unit of each product in each department were determined from engineering records, as follows: Production Departments…
Helm Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Costs: Manufacturing overhead Selling and administrative expenses Total Distribution of resource consumption: Manufacturing overhead Selling and administrative expenses $304,500 $493,000 Activity Cost Pools Customer Support 85% 20% O $116,000 O $428,000 Order Size 5% 60% S S Other 10% 20% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools. How much cost, in total, would be allocated in the first-stage allocation to the Customer Support activity cost 480,000 100,000 580,000 Total 100% 100%
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation $ 91,000 Supervisory expense $ 12,300 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.60 0.30 0.10 Supervisory expense 0.60 0.20 0.20 In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity: MHs (Machining) Orders (Order Filling) Product W1 6,050 198 Product M0 21,800 999 Total…
Howard Corporation manufactures two products: Product B820 and Product P99Y. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products B820 and P99Y. Activity Cost Pool Activity Measure Machining Machine setups Product design Order size Activity Measure Machine-hours Number of setups Number of products Direct labor-hours O $704,200 $301,800 Machine-hours Number of setups Number of products Direct labor-hours O $610,000 O $503,000 Total Cost $ 330,000 $ 300,000 S 46,000 2 products $ 330,000 10,000 DLHs Total Activity 15,000 MHs 500 setups Product B820 7,000 200 1 3,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product B820? Product P99Y 8,000 300 1 7,000
Assume a company manufactures only two products—14,000 units of Product C and 6,000 units of Product D. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products C and D: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 300,000 15,000 MH Machine setups Number of setups $ 150,000 200 Setups Product design Number of products $ 78,000 2 Products Activity Measure Product C Product D Machine-hours 9,000 6,000 Number of setups 50 150 Number of products 1 1 Using the ABC system, how much overhead cost would be assigned from the Machine Setups cost pool to Product D? Multiple Choice $115,200 $112,500 $122,500 $102,500