Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected productio 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 $26.00 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit $284.60 $ 177.80 Expected Production 520 620 Activity Cost Pools Labor-related Product testing Order size Direct Labor-Hours Per Unit The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Measures DLHS Tests MHS 11.2 8.2 Total Direct Labor-Hours 5,824 5,084 10,908 Estimated Overhead Cost $ 100, 156 74,008 395,000 $ 569,164 Product V9 5,824 930 5,000 Expected Activity Product M6 5,084 1,240 4,480 Total 10,908 2,170 9,480 Required: Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system each of the two products. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answers as positive values.)
Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected productio 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 $26.00 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit $284.60 $ 177.80 Expected Production 520 620 Activity Cost Pools Labor-related Product testing Order size Direct Labor-Hours Per Unit The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Measures DLHS Tests MHS 11.2 8.2 Total Direct Labor-Hours 5,824 5,084 10,908 Estimated Overhead Cost $ 100, 156 74,008 395,000 $ 569,164 Product V9 5,824 930 5,000 Expected Activity Product M6 5,084 1,240 4,480 Total 10,908 2,170 9,480 Required: Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system each of the two products. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answers as positive values.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:TB Problem Qu. 4-205 (Algo) Rondeau, Incorporated, manufactures and sells...
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 $26.00 per DLH. The direct materials cost per unit for each product is given below:
Direct Materials Cost
per Unit
Labor-related
Product testing
Order size
$284.60
$ 177.80
Activity Cost Pools
Expected
Production
520
620
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
$
Activity
Measures
DLHS
Tests
MHS
Product V9
Direct Labor-Hours Total Direct
Per Unit
Answer is complete but not entirely correct.
575.80 x $
396.41 X
179.39 $
Estimated Overhead
Cost
$ 100, 156
11.2
8.2
Product M6
Labor-Hours
5,824
5,084
10,908
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.)
391.00 x
275.58 x
115.42
74,008
395,000
$ 569,164
Product V9
5,824
930
5,000
Expected Activity
Product M6
5,084
1,240
4,480
Total
10,908
2,170
9,480
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