Swifty Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Swifty is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be assigned to each product line. The information shown below relates to overhead. Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line (a) (1) (2) (b1) Your answer is correct. eTextbook and Media (a) One mobile safe $ (b) One walk-in safe $ The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.) Your answer is incorrect. Mobile Safes Walk-in Safes One mobile safe $ 200 One walk-in safe $ 300 450 800 416 3,536 200 50 350 1,700 The total estimated manufacturing overhead of $260,000 was comprised of $160,000 for materials handling costs and $100,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, e.g. 12.25.) What amount of materials handling costs are assigned to: per unit per unit each each Attempts: 1 of 5 used
Swifty Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Swifty is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be assigned to each product line. The information shown below relates to overhead. Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line (a) (1) (2) (b1) Your answer is correct. eTextbook and Media (a) One mobile safe $ (b) One walk-in safe $ The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.) Your answer is incorrect. Mobile Safes Walk-in Safes One mobile safe $ 200 One walk-in safe $ 300 450 800 416 3,536 200 50 350 1,700 The total estimated manufacturing overhead of $260,000 was comprised of $160,000 for materials handling costs and $100,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, e.g. 12.25.) What amount of materials handling costs are assigned to: per unit per unit each each Attempts: 1 of 5 used
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![**Swifty Corporation Overhead Cost Analysis**
Swifty Corporation manufactures safes—large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Swifty is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be assigned to each product line. Below is the information related to overhead costs:
| Product Line | Mobile Safes | Walk-in Safes |
|-------------------|--------------|---------------|
| Units planned for production | 200 | 50 |
| Material moves per product line | 300 | 200 |
| Purchase orders per product line | 450 | 350 |
| Direct labor hours per product line | 800 | 1,700 |
### Section (a)
**Using Traditional Costing Method:**
The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), the amount of manufacturing overhead costs assigned to each unit is as follows:
1. One mobile safe:
\[
\$416 \text{ per unit}
\]
2. One walk-in safe:
\[
\$3,536 \text{ per unit}
\]
### Section (b1)
**Using Activity-Based Costing (ABC):**
The total estimated manufacturing overhead of $260,000 was comprised of $160,000 for materials handling costs and $100,000 for purchasing activity costs. Under activity-based costing (ABC), the amounts of materials handling costs assigned to each unit were calculated.
You are asked to find:
- Amount of materials handling costs assigned to one mobile safe.
- Amount of materials handling costs assigned to one walk-in safe.
This section is an exercise for the learner, with instructions to round answers to two decimal places.
### Concept Explanation:
- **Traditional Costing:** Allocates overhead based primarily on a single cost driver such as direct labor hours. This method simplifies the allocation process but may not accurately reflect the actual resource consumption by different product lines.
- **Activity-Based Costing (ABC):** Allocates overhead based on multiple activities that drive costs, leading to more precise cost assignments. This method takes into consideration various activities like material handling and purchasing, making it more accurate but also more complex.
Learners are expected to use the given data to practice calculating costs using both methods and understand the implications of each approach on product costing and profitability analysis.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff98f55b6-fded-4707-ac4b-326c022c9142%2F6efdec67-16f0-4e52-87ec-7348fd227d1a%2F7alz0x_processed.png&w=3840&q=75)
Transcribed Image Text:**Swifty Corporation Overhead Cost Analysis**
Swifty Corporation manufactures safes—large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Swifty is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be assigned to each product line. Below is the information related to overhead costs:
| Product Line | Mobile Safes | Walk-in Safes |
|-------------------|--------------|---------------|
| Units planned for production | 200 | 50 |
| Material moves per product line | 300 | 200 |
| Purchase orders per product line | 450 | 350 |
| Direct labor hours per product line | 800 | 1,700 |
### Section (a)
**Using Traditional Costing Method:**
The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), the amount of manufacturing overhead costs assigned to each unit is as follows:
1. One mobile safe:
\[
\$416 \text{ per unit}
\]
2. One walk-in safe:
\[
\$3,536 \text{ per unit}
\]
### Section (b1)
**Using Activity-Based Costing (ABC):**
The total estimated manufacturing overhead of $260,000 was comprised of $160,000 for materials handling costs and $100,000 for purchasing activity costs. Under activity-based costing (ABC), the amounts of materials handling costs assigned to each unit were calculated.
You are asked to find:
- Amount of materials handling costs assigned to one mobile safe.
- Amount of materials handling costs assigned to one walk-in safe.
This section is an exercise for the learner, with instructions to round answers to two decimal places.
### Concept Explanation:
- **Traditional Costing:** Allocates overhead based primarily on a single cost driver such as direct labor hours. This method simplifies the allocation process but may not accurately reflect the actual resource consumption by different product lines.
- **Activity-Based Costing (ABC):** Allocates overhead based on multiple activities that drive costs, leading to more precise cost assignments. This method takes into consideration various activities like material handling and purchasing, making it more accurate but also more complex.
Learners are expected to use the given data to practice calculating costs using both methods and understand the implications of each approach on product costing and profitability analysis.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education