Tent Master produces Pup tents and Pop-up tents. The company budgets $312,000 of overhead cost and 52,000 direct labor hours. Additional information follows. Per Unit Selling Price Direct Materials Direct Labor Pup tent $ 82 $ 23 $ 44 Pop-up tent 77 27 32 Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage Assembly $ 208,000 Direct labor hours (DLH) 52,000 Electricity 34,000 Machine hours (MH) 10,000 Materials purchasing 70,000 Purchase orders (PO) 400 Total $ 312,000 Required: Compute an activity rate for each activity using activity-based costing. The following actual activity usage produced 10,000 Pup tents and 8,000 Pop-up tents. Allocate overhead cost to Pup tents and to Pop-up tents and compute overhead cost per unit for each product. Activity Cost Driver Activity Usage Pup tents Pop-up tents Direct labor hours(DLH) 35,000 17,000 Machine hours (MH) 4,000 6,000 Purchase orders(PO) 160 240 Compute product cost per unit for Pup tents and for Pop-up tents. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).
Tent Master produces Pup tents and Pop-up tents. The company budgets $312,000 of overhead cost and 52,000 direct labor hours. Additional information follows. Per Unit Selling Price Direct Materials Direct Labor Pup tent $ 82 $ 23 $ 44 Pop-up tent 77 27 32 Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage Assembly $ 208,000 Direct labor hours (DLH) 52,000 Electricity 34,000 Machine hours (MH) 10,000 Materials purchasing 70,000 Purchase orders (PO) 400 Total $ 312,000 Required: Compute an activity rate for each activity using activity-based costing. The following actual activity usage produced 10,000 Pup tents and 8,000 Pop-up tents. Allocate overhead cost to Pup tents and to Pop-up tents and compute overhead cost per unit for each product. Activity Cost Driver Activity Usage Pup tents Pop-up tents Direct labor hours(DLH) 35,000 17,000 Machine hours (MH) 4,000 6,000 Purchase orders(PO) 160 240 Compute product cost per unit for Pup tents and for Pop-up tents. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Tent Master produces Pup tents and Pop-up tents. The company budgets $312,000 of overhead cost and 52,000 direct labor hours. Additional information follows.
Per Unit Selling Price Direct Materials Direct Labor
Pup tent $ 82 $ 23 $ 44
Pop-up tent 77 27 32
Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage
Assembly $ 208,000 Direct labor hours (DLH) 52,000
Electricity 34,000 Machine hours (MH) 10,000
Materials purchasing 70,000 Purchase orders (PO) 400
Total $ 312,000
Required:
Compute an activity rate for each activity using activity-based costing.
The following actual activity usage produced 10,000 Pup tents and 8,000 Pop-up tents. Allocate overhead cost to Pup tents and to Pop-up tents and compute overhead cost per unit for each product.
Activity Cost Driver Activity Usage
Pup tents Pop-up tents
Direct labor hours(DLH) 35,000 17,000
Machine hours (MH) 4,000 6,000
Purchase orders(PO) 160 240
Compute product cost per unit for Pup tents and for Pop-up tents.
For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).
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