Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools: Fabrication Department Finishing Department Cost Driver Maintenance $ 36,000 18,000 Machine hours Materials handling 54,000 27,000 Material moves Machine 126,000 9,000 Machine setups Inspections - 45,000 Inspection hours Total $ 216,000 $ 99,000 The following activity predictions were also made for the year: Fabrication Department Finishing Department Machine hours 5,000 2,500 Material moves 1,500 750 Machine setups 350 25 Inspection hours - 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models: SW100 SG150 Direct materials cost $ 12,000 $ 18,000 Direct labor cost $ 4,800 $ 3,600 Machine hours (Fabrication) 250 350 Machine hours (Finishing) 100 50 Materials moves 20 40 Machine setups 5 10 Inspection hours 15 30 a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours. Round rate to two decimal places. Overhead rate based on total machine hours: $Answer per machine hour Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places. Product Costs per Unit SW100 SG150 Direct materials Answer Answer Direct labor Answer Answer Manufacturing overhead Answer Answer Total cost per batch Answer Answer Number of units per batch Answer Answer Cost per unit Answer Answer b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments. Round to two decimal places, if applicable. Overhead rate based on machine hours for Fabrication Dept.: $Answer per machine hour. Overhead rate based on machine hours for Finishing Dept.: $Answer per machine hour. Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Answer Answer Direct labor Answer Answer Manufacturing overhead: Fabrication Dept. Answer Answer Finishing Dept. Answer Answer Total cost per batch Answer Answer Number of units per batch Answer Answer Cost per unit Answer Answer c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities. Round rate to two decimal places, if applicable. Activity-based overhead rates: Maintenance Answer Materials handling Answer Machine setup Answer Inspection activities Answer Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Answer Answer Direct labor Answer Answer Manufacturing overhead: Maintenance activity Answer Answer Materials handling activity Answer Answer Machine setups activity Answer Answer Inspections activity Answer Answer Total cost per batch Answer Answer Number of units per batch Answer Answer Cost per unit Answer Answer

Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools: Fabrication Department Finishing Department Cost Driver Maintenance $ 36,000 18,000 Machine hours Materials handling 54,000 27,000 Material moves Machine 126,000 9,000 Machine setups Inspections - 45,000 Inspection hours Total $ 216,000 $ 99,000 The following activity predictions were also made for the year: Fabrication Department Finishing Department Machine hours 5,000 2,500 Material moves 1,500 750 Machine setups 350 25 Inspection hours - 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models: SW100 SG150 Direct materials cost $ 12,000 $ 18,000 Direct labor cost $ 4,800 $ 3,600 Machine hours (Fabrication) 250 350 Machine hours (Finishing) 100 50 Materials moves 20 40 Machine setups 5 10 Inspection hours 15 30 a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours. Round rate to two decimal places. Overhead rate based on total machine hours: $Answer per machine hour Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places. Product Costs per Unit SW100 SG150 Direct materials Answer Answer Direct labor Answer Answer Manufacturing overhead Answer Answer Total cost per batch Answer Answer Number of units per batch Answer Answer Cost per unit Answer Answer b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments. Round to two decimal places, if applicable. Overhead rate based on machine hours for Fabrication Dept.: $Answer per machine hour. Overhead rate based on machine hours for Finishing Dept.: $Answer per machine hour. Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Answer Answer Direct labor Answer Answer Manufacturing overhead: Fabrication Dept. Answer Answer Finishing Dept. Answer Answer Total cost per batch Answer Answer Number of units per batch Answer Answer Cost per unit Answer Answer c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities. Round rate to two decimal places, if applicable. Activity-based overhead rates: Maintenance Answer Materials handling Answer Machine setup Answer Inspection activities Answer Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Answer Answer Direct labor Answer Answer Manufacturing overhead: Maintenance activity Answer Answer Materials handling activity Answer Answer Machine setups activity Answer Answer Inspections activity Answer Answer Total cost per batch Answer Answer Number of units per batch Answer Answer Cost per unit Answer Answer

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Activity-Based Costing

Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools:

	Fabrication Department	Finishing Department	Cost Driver
Maintenance	$ 36,000	18,000	Machine hours
Materials handling	54,000	27,000	Material moves
Machine	126,000	9,000	Machine setups
Inspections	-	45,000	Inspection hours
Total	$ 216,000	$ 99,000

The following activity predictions were also made for the year:

	Fabrication Department	Finishing Department
Machine hours	5,000	2,500
Material moves	1,500	750
Machine setups	350	25
Inspection hours	-	500

It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models:

	SW100	SG150
Direct materials cost	$ 12,000	$ 18,000
Direct labor cost	$ 4,800	$ 3,600
Machine hours (Fabrication)	250	350
Machine hours (Finishing)	100	50
Materials moves	20	40
Machine setups	5	10
Inspection hours	15	30

a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours.

Round rate to two decimal places.

Overhead rate based on total machine hours: $Answer per machine hour

Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places.

Product Costs per Unit	SW100	SG150
Direct materials	Answer	Answer
Direct labor	Answer	Answer
Manufacturing overhead	Answer	Answer
Total cost per batch	Answer	Answer
Number of units per batch	Answer	Answer
Cost per unit	Answer	Answer

b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments.

Round to two decimal places, if applicable.

Overhead rate based on machine hours for Fabrication Dept.: $Answer per machine hour.

Overhead rate based on machine hours for Finishing Dept.: $Answer per machine hour.

Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.

Product Costs per Unit	SW100	SG150
Direct materials	Answer	Answer
Direct labor	Answer	Answer
Manufacturing overhead:
Fabrication Dept.	Answer	Answer
Finishing Dept.	Answer	Answer
Total cost per batch	Answer	Answer
Number of units per batch	Answer	Answer
Cost per unit	Answer	Answer

c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities.

Round rate to two decimal places, if applicable.

Activity-based overhead rates:
Maintenance	Answer
Materials handling	Answer
Machine setup	Answer
Inspection activities	Answer

Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.

Product Costs per Unit	SW100	SG150
Direct materials	Answer	Answer
Direct labor	Answer	Answer
Manufacturing overhead:
Maintenance activity	Answer	Answer
Materials handling activity	Answer	Answer
Machine setups activity	Answer	Answer
Inspections activity	Answer	Answer
Total cost per batch	Answer	Answer
Number of units per batch	Answer	Answer
Cost per unit	Answer	Answer

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