Tables Galore produces two types of tables, wood and plastic. Both products pass through two producing departments. Wood tables production is much more labour-intensive than plastic tables. The wood table is more popular and in greater demand than the plastic table. The following data have been gathered for the two tables for the year: Wood Table 40,000 $800 $200 200,000 100,000 15,000 20,000 40,000 Plastic Table 10.000 $300 $100 60,000 200,000 5,000 30,000 10.000 Units produced Unit Selling Price Unit prime cost Direct labour hours Machine hours Engineering labour hours Maintenance hours Number of inspections The following infomation relates to the overhead costs for the year: Overhead Activity Machining Engineering Maintenance Inspections Total Activity Cost $600,000 $400,000 $200,000 $100,000 $1,300,000 Required: 1. Calculate the overhead cost per unit for each table by using a plantwide rate based on direct labour hours. 2. Calculate the overhead activity rates and overhead cost per unit for each product using Activity-Based Costing (ABC). 3. Explain why the unit overhead cost assigned to each table is different under the ABC method and plantwide method.

Tables Galore produces two types of tables, wood and plastic. Both products pass through two producing departments. Wood tables production is much more labour-intensive than plastic tables. The wood table is more popular and in greater demand than the plastic table. The following data have been gathered for the two tables for the year: Wood Table 40,000 $800 $200 200,000 100,000 15,000 20,000 40,000 Plastic Table 10.000 $300 $100 60,000 200,000 5,000 30,000 10.000 Units produced Unit Selling Price Unit prime cost Direct labour hours Machine hours Engineering labour hours Maintenance hours Number of inspections The following infomation relates to the overhead costs for the year: Overhead Activity Machining Engineering Maintenance Inspections Total Activity Cost $600,000 $400,000 $200,000 $100,000 $1,300,000 Required: 1. Calculate the overhead cost per unit for each table by using a plantwide rate based on direct labour hours. 2. Calculate the overhead activity rates and overhead cost per unit for each product using Activity-Based Costing (ABC). 3. Explain why the unit overhead cost assigned to each table is different under the ABC method and plantwide method.

Name: Tables Galore produces two types of tables, wood and plastic. Both pr
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Description: Tables Galore produces two types of tables, wood and plastic. Both products pass throughtwo producing departments. Wood tables production is much more labour-intensive thanplastic tables. The wood table is more popular and in greater demand than the

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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