Themba Ltd manufactures two types of soccer balls, namely Training and Match balls. Fixedmanufacturing overheads (FMO) are allocated to products using activity-based costing (ABC).Below is the Activity area and the FMO applicable to this area.Activity areaSet-up costsMachine costsQuality inspectionsFixed manufacturingoverheadsR480 0001 600 500800 000•Set-up costs: The manufacturing machines need to be set up before each production run. The ballsare manufactured in production runs and each independent Training production run contains 250balls and each independent Match production run contains 100 balls.• Machine cost: Temba's production process is highly automated, and it takes 15 machine minutesand 24 machine minutes to manufacture one Training and one Match ball respectively.• Quality inspections: Every 10th Match ball and every 200th Training ball is quality inspected.• Temba manufactured 500 000 Training balls and 100 000 Match balls.The total machine cost allocated to Match balls is:Select one:a.R388 000,00b. R266 750,00C.R800 250,00d. R984 923,08e.None of the options

The objective of the question is to calculate the total machine cost allocated to Match balls using…

Answered: Themba Ltd manufactures two types of…

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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Carter, Incorporated, produces two products, Product A and Product B. Carter uses a traditional volume-based costing system in which direct labor hours are the allocation base. Carter is considering switching to an ABC system by splitting its manufacturing overhead cost across three activities: Design, Production, and Inspection. The cost of each activity and usage of the cost drivers are as follows: Activity Pool (Driver) Design (engineering hours) Production (direct labor hours) Inspection (batches) Cost of Pool $ 300,000 500,000 200,000 300,000 100 Carter manufactures 10,000 units of Product A and 7,500 units of Product B per month. Required: a. Calculate the predetermined overhead rate under the traditional costing system. b. Calculate the activity rate for Design. c. Calculate the activity rate for Machining. d. Calculate the activity rate for Inspection. e. Calculate the indirect manufacturing costs assigned to each unit of Product A under the traditional costing system. f.…
Rooney Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Required Labor Cost $ 1,190 1,080 Laptop keyboards Desktop keyboards Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Material Number of Number of Cost $6,000 7,000 Cost Per Unit Setups 26 13 Parts 46 25 Allocation Rate 1% of material cost $ 109.00 per setup $ 5.00 per part $ 1.30 per minute $10.00 per order Inspection Time 7,200 minutes 5,100 minutes Number of Orders 61 a. Compute the cost per unit of laptop and desktop keyboards,…
ABC Company produces two products, Nifty and So-So, and uses a costing system in which all overhead is accumulated in a single cost pool and allocated based on machine hours. Blaine's management has decided to implement ABC because a cost study has revealed significant amounts of overhead cost related to setup activity and design activity. The number of setups and the number of design hours will be the activity drivers for the two new cost pools, and machine hours will continue as the base for allocating the remaining overhead. Selected information follows for ABC Company's most recent year of operations: A В ТОТAL UNITS PRODUCED 500 15,500 16,000 DIRECT MATERIAL COST PER UNIT $ 200.00 $ 20.00 ТОTAL 100,000.00 310,000.00 $ 410,000.00 MACHINE HOURS 3,000 47,000 50,000 DIRECT LABOR COST 2$ 50,000 $ 350,000 $ 400,000 SETUP 120 80 200 DESIGN HOURS 6,000 4,000 10,000 OVERHEAD SETUP RELATED $ 250,000 DESIGN RELATED 350,000 OTHERS 900,000 Calculate the total and per unit reported cost for the…
Nobel Ltd adopts process costing rather than job costing. Which of the following statement could explain why? a. Nobel Ltd produces units according to customer specifications. b. Nobel Ltd wants to track the cost of material, labour and overhead to specific customers. c. Nobel Ltd wants to assign overhead using machine hours as the allocation base. d. Nobel Ltd manufactures virtually identical products using a series of continuous processes.
Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Number of gliders Number of orders Activity Rate $16 per direct labor-hour Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months: $ 198 per order. $260 per custom design $ 422 per customer Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider. The company's direct labor rate is $18 per hour. Customer margin Standard Model 16 1 0 27.50 $ 1,925 $452 Custom Design 2 2 2 32.00 $ 2,490 $582 Required: Using the company's…
A. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? B. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product?
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Themba Ltd manufactures two types of soccer balls, namely Training and Match balls. Fixed manufacturing overheads (FMO) are allocated to products using activity-based costing (ABC). Below is the Activity area and the FMO applicable to this area. Activity area Set-up costs Machine costs Quality inspections Fixed manufacturing overheads R 480 000 1 600 500 800 000 • Set-up costs: The manufacturing machines need to be set up before each production run. The balls are manufactured in production runs and each independent Training production run contains 250 balls and each independent Match production run contains 100 balls. • Machine cost: Temba's production process is highly automated, and it takes 15 machine minutes and 24 machine minutes to manufacture one Training and one Match ball respectively. • Quality inspections: Every 10th Match ball and every 200th Training ball is quality inspected. • Temba manufactured 500 000 Training balls and 100 000 Match balls. The total quality inspection…
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