Required: a. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? b. What unit product costs will be reported for the two products if the ABC system is used? Complete this question by entering your answers in the tabs below. Required A Required B What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? Note: Do not round intermediate calculations. Direct labor-hours Direct material costs Direct labor cost Overhead Total costs Number of units Unit cost Direct material costs Direct labor cost Overhead: Material inspection Assembly Equipment setup Packaging and shipping $ Total costs Number of units Unit cost $ $ LC-20 $ 12,960 583,200 $ Required A Required B What unit product costs will be reported for the two products if the ABC system is used? Note: Do not round intermediate calculations. LC-20 583,200 $ 583,200 $ 0 0 LC-50 LC-50 194,400 583,200 $ 194,400 6,480 194,400 0 194,400 0

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Required:
a. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used?
b. What unit product costs will be reported for the two products if the ABC system is used?
Complete this question by entering your answers in the tabs below.
Required A Required B
What unit product costs will be reported for the two products in the coming year if the current cost system continues to be
used?
Note: Do not round intermediate calculations.
Direct labor-hours
Direct material costs
Direct labor cost
Overhead
Total costs
Number of units
Unit cost
Required A
Required B
Direct material costs
Direct labor cost
Overhead:
Material inspection
Assembly
Equipment setup
Packaging and shipping
Total costs
Number of units
Unit cost
$
$
$
LC-20
$
12,960
583,200 $
What unit product costs will be reported for the two products if the ABC system is used?
Note: Do not round intermediate calculations.
LC-20
583,200 $
583,200 $
0
583,200 $
0
LC-50
LC-50
194,400
194,400
6,480
194,400
0
194,400
0
Transcribed Image Text:Required: a. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? b. What unit product costs will be reported for the two products if the ABC system is used? Complete this question by entering your answers in the tabs below. Required A Required B What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? Note: Do not round intermediate calculations. Direct labor-hours Direct material costs Direct labor cost Overhead Total costs Number of units Unit cost Required A Required B Direct material costs Direct labor cost Overhead: Material inspection Assembly Equipment setup Packaging and shipping Total costs Number of units Unit cost $ $ $ LC-20 $ 12,960 583,200 $ What unit product costs will be reported for the two products if the ABC system is used? Note: Do not round intermediate calculations. LC-20 583,200 $ 583,200 $ 0 583,200 $ 0 LC-50 LC-50 194,400 194,400 6,480 194,400 0 194,400 0
Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the
company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and
LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products.
The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing
systems as a way to ensure that managers had the best information available for decision making. However, rather than
update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the
Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees
was formed to propose an ABC system and compare the product costs with those reported by the current system. Based
on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company.
The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a
great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following
pools and drivers. The costs were based on the forecasts for the coming year.
Cost Pools
Material inspection
Assembly
Machine-hours
Equipment setup
853,200
Production runs
Packaging and shipping
453,600
Units shipped
Data for production of the two products at the Bayside plant for the coming year of operations follows:
Costs
$427,680
2,386,800
Activity Drivers
Direct material cost
Products
LC-20
$583,200
$ 453,600
99,495
81
259, 200
Total direct material costs
Total direct labor costs.
Total machine-hours
Total number of production runs
Number of units produced and shipped
All direct labor at the Bayside plant is paid $35 per hour.
LC-50
$ 194,400
$ 226,800
49,680
54
64,800
Transcribed Image Text:Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant, Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Machine-hours Equipment setup 853,200 Production runs Packaging and shipping 453,600 Units shipped Data for production of the two products at the Bayside plant for the coming year of operations follows: Costs $427,680 2,386,800 Activity Drivers Direct material cost Products LC-20 $583,200 $ 453,600 99,495 81 259, 200 Total direct material costs Total direct labor costs. Total machine-hours Total number of production runs Number of units produced and shipped All direct labor at the Bayside plant is paid $35 per hour. LC-50 $ 194,400 $ 226,800 49,680 54 64,800
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