Traditional Product Costing versus Activity-Based CostingRidgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs $1,468,800 Number of setups 7,200 Ordering costs 390,000 Number of orders 65,000 Maintenance 2,760,000 Number of machine hours 80,000 Power 264,000 Number of kilowatt hours 440,000 Total predicted direct labor hours for next year is 52,000. The following data are for two recently completed jobs: Job 201 Job 202 Cost of direct materials $14,000 $15,500 Cost of direct labor $22,100 $65,800 Number of units completed 1,300 1,150 Number of direct labor hours 220 270 Number of setups 15 19 Number of orders 21 42 Number of machine hours 450 360 Number of kilowatt hours 200 300 a. Determine the unit cost for each job using a traditional plantwide overhead rate based on direct labor hours.Round cost per unit answers to two decimal places when applicable. Job 201 Job 202 Direct materials Answer Answer Direct labor Answer Answer Overhead Answer Answer Total cost Answer Answer Units produced Answer Answer Cost per unit Answer Answer b. Determine the unit cost for each job using ABC. Round cost per unit answers to two decimal places when applicable. Job 201 Job 202 Direct materials Answer Answer Direct labor Answer Answer Setup cost Answer Answer Ordering costs Answer Answer Maintenance costs Answer Answer Power Answer Answer Total job costs Answer Answer Units produced Answer Answer Cost per unit Answer Answer

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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Traditional Product Costing versus Activity-Based Costing
Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year:

Overhead Item	Expected Costs	Cost Driver	Maximum Quantity
Setup costs	$1,468,800	Number of setups	7,200
Ordering costs	390,000	Number of orders	65,000
Maintenance	2,760,000	Number of machine hours	80,000
Power	264,000	Number of kilowatt hours	440,000

Total predicted direct labor hours for next year is 52,000. The following data are for two recently completed jobs:

	Job 201	Job 202
Cost of direct materials	$14,000	$15,500
Cost of direct labor	$22,100	$65,800
Number of units completed	1,300	1,150
Number of direct labor hours	220	270
Number of setups	15	19
Number of orders	21	42
Number of machine hours	450	360
Number of kilowatt hours	200	300

a. Determine the unit cost for each job using a traditional plantwide overhead rate based on direct labor hours.
Round cost per unit answers to two decimal places when applicable.

	Job 201	Job 202
Direct materials	Answer	Answer
Direct labor	Answer	Answer
Overhead	Answer	Answer
Total cost	Answer	Answer
Units produced	Answer	Answer
Cost per unit	Answer	Answer

b. Determine the unit cost for each job using ABC. Round cost per unit answers to two decimal places when applicable.

	Job 201	Job 202
Direct materials	Answer	Answer
Direct labor	Answer	Answer
Setup cost	Answer	Answer
Ordering costs	Answer	Answer
Maintenance costs	Answer	Answer
Power	Answer	Answer
Total job costs	Answer	Answer
Units produced	Answer	Answer
Cost per unit	Answer	Answer