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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
100%
Transcribed Image Text: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.
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 4 steps with 4 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