Required: 1. Compute the overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours. If required, round your answers to the nearest cent. Plantwide rate $ per direct labor hour Overhead cost per unit: Scientific $ per unit Business $ per unit 2. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for Department 1 and direct labor hours for Department 2. Repeat using direct labor hours for Department 1 and machine hours for Department 2. Round your intermediate calculations and answers to the nearest cent. Departmental rates: Department 1 $ per machine hour Department 2 $ per direct labor hour Overhead cost per unit: Scientific $ per unit Business $ per unit Departmental rates: Department 1 $ per direct labor hour Department 2 $ per machine hour Overhead cost per unit: Scientific $ per unit Business $ per unit 3. Compute the overhead cost per unit for each product using activity-based costing. Round your calculations and answers to the nearest cent. Overhead Cost Scientific $ per unit Business $ per unit
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
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.
Product-Costing Accuracy, Plantwide and Departmental Rates, ABC
Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products:
| Product-Related Data | ||||
| Scientific | Business | |||
| Units produced per year | 75,000 | 750,000 | ||
| Prime costs | $250,000 | $2,500,000 | ||
| Direct labor hours | 100,000 | 1,000,000 | ||
| Machine hours | 50,000 | 500,000 | ||
| Production runs | 100 | 150 | ||
| Inspection hours | 2,000 | 3,000 | ||
| Maintenance hours | 2,250 | 9,000 |
| Department Data | |||
| Department 1 | Department 2 | ||
| Direct labor hours: | |||
| Scientific calculator | 75,000 | 25,000 | |
| Business calculator | 112,500 | 887,500 | |
| Total | 187,500 | 912,500 | |
| Machine hours: | |||
| Scientific calculator | 25,000 | 25,000 | |
| Business calculator | 400,000 | 100,000 | |
| Total | 425,000 | 125,000 | |
| Setup costs | $225,000 | $225,000 | |
| Inspection costs | 175,000 | 175,000 | |
| Power | 250,000 | 150,000 | |
| Maintenance | 200,000 | 250,000 | |
| Total | $850,000 | $800,000 |
Required:
1. Compute the overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours. If required, round your answers to the nearest cent.
| Plantwide rate | $ per direct labor hour |
| Overhead cost per unit: | |
| Scientific | $ per unit |
| Business | $ per unit |
2. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for Department 1 and direct labor hours for Department 2. Repeat using direct labor hours for Department 1 and machine hours for Department 2. Round your intermediate calculations and answers to the nearest cent.
| Departmental rates: | |
| Department 1 | $ per machine hour |
| Department 2 | $ per direct labor hour |
| Overhead cost per unit: | |
| Scientific | $ per unit |
| Business | $ per unit |
| Departmental rates: | |
| Department 1 | $ per direct labor hour |
| Department 2 | $ per machine hour |
| Overhead cost per unit: | |
| Scientific | $ per unit |
| Business | $ per unit |
3. Compute the overhead cost per unit for each product using activity-based costing. Round your calculations and answers to the nearest cent.
| Overhead Cost | |
| Scientific | $ per unit |
| Business | $ per unit |
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