s Zachary Electronics produces video games in three market categories: commercial, home, and miniature. Zachary has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Total Pooled Cost $ 436,000 251,400 Direct materials cost Direct labor cost Number of labor hours 124,600 319,000 Additional data for each of the product lines follow: Number of machine hours Number of production orders Required Research and development time Number of units Square footage Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Rent, general utilities, maintenance, facility depreciation, administrative salaries Commercial $ 25.19 per unit $10.95 per hour 6,000 10,000 200 10% 15,000 20,000 Home $15.19 per unit $8.95 per hour 12,000 45,000 2,000 20% 45,000 50,000 Miniature $ 12.19 per unit $9.95 per hour 2,000 25,000 800 70% 14,000 30,000 Machine hours Number of production orders Time spent by research department Square footage Cost Driver Total 20,000 80,000 3,000 100% 74,000 100,000 a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount. Check m

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Zachary Electronics produces video games in three market categories: commercial, home, and miniature. Zachary has traditionally
allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently
implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system
ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers:
Category
Unit
Batch
Product
Facility
Total Pooled
Cost
$ 436,000
251,400
124,600
319,000
Additional data for each of the product lines follow:
Direct materials cost
Direct labor cont
Number of labor hours
Number of machine hours
Number of production orders
Research and development time
Number of units
Square footage
Required
Types of Costs
Indirect labor wages, supplies, factory utilities,
machine maintenance
Materials handling, inventory storage, labor for
setups, packaging, labeling and shipping, scheduling
Research and development
Rent, general utilities, maintenance, facility
depreciation, administrative salaries
Commercial
$ 25.19 per unit
$10.95 per hour
6,000
10,000
200
10%
15,000
20,000
Home
$15.19 per unit
$8.95 per hour
12,000
45,000
2,000
20%
45,000
50,000
Miniature
$ 12.19 per unit
$9.95 per hour
2,000
25,000
800
70%
14,000
30,000
Machine hours
Number of production orders
Time spent by research department
Square footage
Cost Driver
Total
20,000
80,000
3,000
100%
74,000
100,000
a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line
using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines.
b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs.
Determine the combined cost of all three product lines.
Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to
the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole
dollar amount.
Check m
Transcribed Image Text:es Zachary Electronics produces video games in three market categories: commercial, home, and miniature. Zachary has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Total Pooled Cost $ 436,000 251,400 124,600 319,000 Additional data for each of the product lines follow: Direct materials cost Direct labor cont Number of labor hours Number of machine hours Number of production orders Research and development time Number of units Square footage Required Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Rent, general utilities, maintenance, facility depreciation, administrative salaries Commercial $ 25.19 per unit $10.95 per hour 6,000 10,000 200 10% 15,000 20,000 Home $15.19 per unit $8.95 per hour 12,000 45,000 2,000 20% 45,000 50,000 Miniature $ 12.19 per unit $9.95 per hour 2,000 25,000 800 70% 14,000 30,000 Machine hours Number of production orders Time spent by research department Square footage Cost Driver Total 20,000 80,000 3,000 100% 74,000 100,000 a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount. Check m
Required
a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line
using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines.
b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs.
Determine the combined cost of all three product lines.
Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to
the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole
dollar amount.
Type of Product
a. Commercial
a. Home
a. Miniature
Combined total
b. Commercial
b. Home
b. Miniature
Combined total
$
Total Cost
$
0
Cost per Unit
Transcribed Image Text:Required a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount. Type of Product a. Commercial a. Home a. Miniature Combined total b. Commercial b. Home b. Miniature Combined total $ Total Cost $ 0 Cost per Unit
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