Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below: Product V9 Product M6 Product V9 Product M6 Total direct labor-hours The direct labor rate is $27.00 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit $ 289.60 $ 182.80 Activity Cost Pools Labor-related Product testing Order size Traditional unit product cost ABC unit product cost Difference Expected Production The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: $ 620 720 Product V9 Direct Labor-Hours Per Unit 12.2 9.2 Activity Measures Estimated Overhead Cost DLHS $ 102,656 Tests MHS 76,008 400,000 $ 578,664 Product M6 0.00 $ Total Direct Labor-Hours 7,564 6,624 14, 188 Required: Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products. (Round your Intermediate calculations and final answers to 2 decimal places. Enter your answers as positive values.) 0.00 Product V9 7,564 1,080 5,500 Expected Activity Product M6 6,624 1,440 4,880 Total 14,188 2,520 10,380
Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below: Product V9 Product M6 Product V9 Product M6 Total direct labor-hours The direct labor rate is $27.00 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit $ 289.60 $ 182.80 Activity Cost Pools Labor-related Product testing Order size Traditional unit product cost ABC unit product cost Difference Expected Production The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: $ 620 720 Product V9 Direct Labor-Hours Per Unit 12.2 9.2 Activity Measures Estimated Overhead Cost DLHS $ 102,656 Tests MHS 76,008 400,000 $ 578,664 Product M6 0.00 $ Total Direct Labor-Hours 7,564 6,624 14, 188 Required: Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products. (Round your Intermediate calculations and final answers to 2 decimal places. Enter your answers as positive values.) 0.00 Product V9 7,564 1,080 5,500 Expected Activity Product M6 6,624 1,440 4,880 Total 14,188 2,520 10,380
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected production
of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below:
Total Direct
Labor-Hours
7,564
6,624
14, 188
The direct labor rate is $27.00 per DLH. The direct materials cost per unit for each product is given below:
Direct Materials Cost per
Unit
Product V9
Product M6
Total direct labor-hours
Product V9
Product M6
$ 289.60
$ 182.80
Activity Cost Pools
Labor-related
Product testing
Order size
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and
expected activity:
Traditional unit product cost
ABC unit product cost
Difference
Expected
Production
620
720
Product V9
$
Direct Labor-Hours
Per Unit
12.2
9.2
Activity
Measures Estimated Overhead Cost
DLHS
$ 102,656
76,008
Tests
MHS
Product M6
0.00 $
Required:
Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system for
each of the two products. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answers as
positive values.)
400,000
$ 578,664
0.00
Product V9
7,564
1,080
5,500
Expected Activity
Product M6
6,624
1,440
4,880
Total
14, 188
2,520
10, 380
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