Spencer's Sports manufactures outdoor equipment at three regional plants. The Freeway Plant produces two models of fishing reels, the Stream and the Surf. The Surf model is heavier and more durable. Overhead costs are currently allocated using direct labor cost. The plant manager has just returned from a week-long executive course where the instructor discussed product costing and, specifically, activity-based costing (ABC). The plant manager has asked the plant controller about implementing ABC at the plant. The controller has collected the following information on plant overhead for the most recent period: Activity Setting up Inspecting Packing and shipping Total overhead Units produced Direct materials cost Direct labor cost Total direct cost. Required: Cost Driver Number of setups Number of inspections Number of packages shipped The controller also collected the following information on production volume and direct costs for each product: Surf 4,500 $ 337,500 297,000 Total 22,500 $ 787,500 504,000 $ 634,500 $ 1,291,500 Required A Stream 18,000 $ 450,000 207,000 $ 657,000 Required B Cost $ 181,440 136,080 85,680 $ 403,200 Complete this question by entering your answers in the tabs below. a. Compute the unit cost of each model under the current system. b. Compute the unit cost of each model under the ABC system suggested by the controller's classification of overhead costs. Cost Driver Volume Stream Surf 15 36 50 Compute the unit cost of each model under the current system. Note: Round your answers to 2 decimal places. 135 45 200
Spencer's Sports manufactures outdoor equipment at three regional plants. The Freeway Plant produces two models of fishing reels, the Stream and the Surf. The Surf model is heavier and more durable. Overhead costs are currently allocated using direct labor cost. The plant manager has just returned from a week-long executive course where the instructor discussed product costing and, specifically, activity-based costing (ABC). The plant manager has asked the plant controller about implementing ABC at the plant. The controller has collected the following information on plant overhead for the most recent period: Activity Setting up Inspecting Packing and shipping Total overhead Units produced Direct materials cost Direct labor cost Total direct cost. Required: Cost Driver Number of setups Number of inspections Number of packages shipped The controller also collected the following information on production volume and direct costs for each product: Surf 4,500 $ 337,500 297,000 Total 22,500 $ 787,500 504,000 $ 634,500 $ 1,291,500 Required A Stream 18,000 $ 450,000 207,000 $ 657,000 Required B Cost $ 181,440 136,080 85,680 $ 403,200 Complete this question by entering your answers in the tabs below. a. Compute the unit cost of each model under the current system. b. Compute the unit cost of each model under the ABC system suggested by the controller's classification of overhead costs. Cost Driver Volume Stream Surf 15 36 50 Compute the unit cost of each model under the current system. Note: Round your answers to 2 decimal places. 135 45 200
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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Question
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Transcribed Image Text:nequlicu.
a. Compute the unit cost of each model under the current system.
b. Compute the unit cost of each model under the ABC system suggested by the controller's classification of overhead costs.
Complete this question by entering your answers in the tabs below.
Required A Required B
Compute the unit cost of each model under the current system.
Note: Round your answers to 2 decimal places.
Stream
Surf
Unit cost
Required A
a. Compute the unit cost on ta mer under the content system.
b. Compute the unit cost of each model under the ABC system suggested by the controller's classification of overhead costs.
Complete this question by entering your answers in the tabs below.
Stream
Surf
< Required A
Required B
Required B
Unit cost
>
Compute the unit cost of each model under the ABC system suggested by the controller's classification of overhead costs.
Note: Do not round intermediate calculations and round your final answers to the 2 decimal places.
Transcribed Image Text:Spencer's Sports manufactures outdoor equipment at three regional plants. The Freeway Plant produces two models of fishing reels,
the Stream and the Surf. The Surf model is heavier and more durable. Overhead costs are currently allocated using direct labor cost.
The plant manager has just returned from a week-long executive course where the instructor discussed product costing and,
specifically, activity-based costing (ABC). The plant manager has asked the plant controller about implementing ABC at the plant. The
controller has collected the following information on plant overhead for the most recent period:
Activity
Setting up
Inspecting
Packing and shipping
Total overhead
Units produced
Direct materials cost
Direct labor cost
Total direct cost.
Required:
Cost Driver
Number of setups
Number of inspections
Number of packages shipped
The controller also collected the following information on production volume and direct costs for each product:
Surf
4,500
$ 337,500
297,000
Total
22,500
$ 787,500
504,000
$ 634,500 $ 1,291,500
Required A
Stream
18,000
$ 450,000
207,000
$ 657,000
Required B
Cost
$ 181,440
136,080
85,680
$ 403,200
Complete this question by entering your answers in the tabs below.
a. Compute the unit cost of each model under the current system.
b. Compute the unit cost of each model under the ABC system suggested by the controller's classification of overhead costs.
Cost Driver Volume
Stream
Surf
15
36
50
Compute the unit cost of each model under the current system.
Note: Round your answers to 2 decimal places.
135
45
200
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