Vishnu !Required informationHall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but aremade of different metals for operational performance reasons. The metal used in Standard is easy to work with and thereare few quality issues or reworking required on the machines. The metal used in Ultra is more difficult to work with andoften needs additional machine time and rework.Data on expected operations and direct costs for the next fiscal year follow:Units producedDirect labor-hours usedMachine-hours usedDirect materials costsDirect labor costsAccountStandardAdministrationEngineeringMachine operation and maintenance30,00090,00015,000MiscellaneousSupervisionTotal$ 2,250,0002,520,000Ultra7,50022,50022,500Amount$ 825,400902,500785,000540,100884,5003,937,500$ 1,500,000855,000The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the nextfiscal year:TotalThe cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the directcosts of the product. Overhead costs are allocated based on direct labor-hours.37,500112,50037,500$ 3,750,0003,375,000Required:a. Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system.b. An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analystsuggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overheadconsists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of theremaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overheadwould be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on thesystem proposed by the analyst.

Overhead means the amount of expenses incurred indirectly to produce the goods. These expenses…

Required information Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons. The metal used in Standard is easy to work with and there are few quality issues or reworking required on the machines. The metal used in Ultra is more difficult to work with and often needs additional machine time and rework. Data on expected operations and direct costs for the next fiscal year follow: Units produced Direct labor-hours used Machine-hours used Direct materials costs Direct labor costs Account Standard Administration Engineering Machine operation and maintenance 30,000 90,000 15,000 $2,250,000 2,520,000 Miscellaneous Supervision Total The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year: Ultra The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor-hours. Amount $ 825,400 7,500 22,500 22,500 902,500 785,000 540,100 884,500 3,937,500 $ 1,500,000 855,000 Total 37,500 112,500 37,500 $ 3,750,000 3,375,000 Required: a. Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system. o. An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of the remaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst.

Required information Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons. The metal used in Standard is easy to work with and there are few quality issues or reworking required on the machines. The metal used in Ultra is more difficult to work with and often needs additional machine time and rework. Data on expected operations and direct costs for the next fiscal year follow: Units produced Direct labor-hours used Machine-hours used Direct materials costs Direct labor costs Account Standard Administration Engineering Machine operation and maintenance 30,000 90,000 15,000 $2,250,000 2,520,000 Miscellaneous Supervision Total The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year: Ultra The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor-hours. Amount $ 825,400 7,500 22,500 22,500 902,500 785,000 540,100 884,500 3,937,500 $ 1,500,000 855,000 Total 37,500 112,500 37,500 $ 3,750,000 3,375,000 Required: a. Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system. o. An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of the remaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...

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