Trombly Travel Products (TTP) manufactures and sells travel bags and accessories. TTP produces backpacks at its West Street plant. The different backpack models are identified by the primary material used: canvas, nylon, or leather. The company uses a plantwide rate based on direct labor-hours. The plantwide rate is $5.00 per labor-hour. All direct labor at TTP is paid $32 per hour. Canvas and nylon backpacks are produced in Department 1. Leather backpacks are produced in Department 2. The product costs (per backpack) follow. Direct materials Direct labor Canvas $ 27.00 70.40 Overhead Machine-hours Labor-hours Nylon $. 32.00 86.40 Leather $ 42.00 92.80 Required: a. Compute the total unit cost of each backpack model using the plantwide allocation method. b. The machines in Department 1 are older and almost fully depreciated. The equipment in Department 2 was recently updated and the process in Department 2 is more highly automated. At the request of the manager of Department 1, a cost analyst at TTP provided the following information on overhead costs, machine-hours and direct labor-hours for the two departments. Department 1. Department 2 $ 98,040 $ 69,680 16,400 20,800 22,800 11,400 Using labor-hours as the department allocation base for Department 1 and machine-hours as the department allocation base for Department 2, compute the allocation rate for each. c. Compute the unit cost of each model of backpack using the department allocation rates computed in requirement (b) (labor-hours in Department 1 and machine-hours in Department 2). Note: Do not round your intermediate calculations.
Trombly Travel Products (TTP) manufactures and sells travel bags and accessories. TTP produces backpacks at its West Street plant. The different backpack models are identified by the primary material used: canvas, nylon, or leather. The company uses a plantwide rate based on direct labor-hours. The plantwide rate is $5.00 per labor-hour. All direct labor at TTP is paid $32 per hour. Canvas and nylon backpacks are produced in Department 1. Leather backpacks are produced in Department 2. The product costs (per backpack) follow. Direct materials Direct labor Canvas $ 27.00 70.40 Overhead Machine-hours Labor-hours Nylon $. 32.00 86.40 Leather $ 42.00 92.80 Required: a. Compute the total unit cost of each backpack model using the plantwide allocation method. b. The machines in Department 1 are older and almost fully depreciated. The equipment in Department 2 was recently updated and the process in Department 2 is more highly automated. At the request of the manager of Department 1, a cost analyst at TTP provided the following information on overhead costs, machine-hours and direct labor-hours for the two departments. Department 1. Department 2 $ 98,040 $ 69,680 16,400 20,800 22,800 11,400 Using labor-hours as the department allocation base for Department 1 and machine-hours as the department allocation base for Department 2, compute the allocation rate for each. c. Compute the unit cost of each model of backpack using the department allocation rates computed in requirement (b) (labor-hours in Department 1 and machine-hours in Department 2). Note: Do not round your intermediate calculations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
H1.
Transcribed Image Text:Trombly Travel Products (TTP) manufactures and sells travel bags and accessories. TTP produces backpacks at its West Street plant.
The different backpack models are identified by the primary material used: canvas, nylon, or leather. The company uses a plantwide
rate based on direct labor-hours. The plantwide rate is $5.00 per labor-hour. All direct labor at TTP is paid $32 per hour. Canvas and
nylon backpacks are produced in Department 1. Leather backpacks are produced in Department 2. The product costs (per backpack)
follow.
Direct materials
Direct labor
Canvas
$ 27.00
20.40
Overhead
Machine-hours
Labor-hours
Nylon
$. 32.00
86.40
Leather
$ 42.00
92.80
Required:
a. Compute the total unit cost of each backpack model using the plantwide allocation method.
b. The machines in Department 1 are older and almost fully depreciated. The equipment in Department 2 was recently updated and
the process in Department 2 is more highly automated. At the request of the manager of Department 1, a cost analyst at TTP
provided the following information on overhead costs, machine-hours and direct labor-hours for the two departments.
Department 1. Department 2
$ 98,040
$ 69,680
16,400
20,800
22,800
11,400
Using labor-hours as the department allocation base for Department 1 and machine-hours as the department allocation base for
Department 2, compute the allocation rate for each.
c. Compute the unit cost of each model of backpack using the department allocation rates computed in requirement (b) (labor-hours in
Department 1 and machine-hours in Department 2).
Note: Do not round your intermediate calculations.
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required A Required B Required C
Compute the total unit cost of each backpack model using the plantwide allocation method.
Note: Do not round your intermediate calculations. Round your answers to 2 decimal places.
Canvas
Nylon
Leather
Show Transcribed Text
Total Unit Cost
Department 1
Department 2
Complete this question by entering your answers in the tabs below.
Required A Required B Required C
Using labor-hours as the department allocation base for Department 1 and machine-hours as the department allocation base
for Department 2, compute the allocation rate for each.
Note: Round your answers to 2 decimal places.
Canvas
Nylon
Leather
<Required A
Allocation Rate
Show Transcribed Text
per labor hour
per machine hour
Total Unit
Cost
< Required A
Ć
J
Required B >
< Required B
Complete this question by entering your answers in the tabs below.
Required C >
*
c
Required A Required B Required C
Compute the unit cost of each model of backpack using the department allocation rates computed in requirement (b) (labor-
hours in Department 1 and machine-hours in Department 2).
Note: Do not round your intermediate calculations. Round your answers to 2 decimal places.
Required C
>
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!
Step 1: Introduce to Plantwide Overhead Rate and Activity Rate
VIEWStep 2: Working for direct labor hours per unit and overhead cost per unit using Plantwide Rate
VIEWStep 3: Working for total unit cost using Plantwide Rate
VIEWStep 4: Working for department overhead rate and Overhead cost per unit
VIEWStep 5: Working for total cost per unit using department rate
VIEWSolution
VIEW
Trending now
This is a popular solution!
Step by step
Solved in 6 steps
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