Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $15 per hour and that there were no beginning inventories. The following information was available for 2013, based on an expected production level of 50,000 units for the year, which will require 200,000 direct labor hours: Materials handling Activity (Cost Driver) Cutting and lathe work Assembly and inspection Units Produced 3,200 Required: a. b. Budgeted Costs for 2013 $ Cost Driver Used as Allocation Base $107,200 250,000 1,750,000 4,000,000 Direct Materials Costs Cost Allocation Rate Number of Parts Used Number of parts used The following production, costs, and activities occurred during the month of July: 70,400 Number of parts used Direct labor hours Direct Labor Hours $ 13,120 0.20 per part 1.40 20.00 per part per hour Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July (using the activity-based costing approach). (Round "cost per unit produced" to 2 decimal places.) Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2013.) (Round "cost per unit produced" to 2 decimal places.)
Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $15 per hour and that there were no beginning inventories. The following information was available for 2013, based on an expected production level of 50,000 units for the year, which will require 200,000 direct labor hours: Materials handling Activity (Cost Driver) Cutting and lathe work Assembly and inspection Units Produced 3,200 Required: a. b. Budgeted Costs for 2013 $ Cost Driver Used as Allocation Base $107,200 250,000 1,750,000 4,000,000 Direct Materials Costs Cost Allocation Rate Number of Parts Used Number of parts used The following production, costs, and activities occurred during the month of July: 70,400 Number of parts used Direct labor hours Direct Labor Hours $ 13,120 0.20 per part 1.40 20.00 per part per hour Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July (using the activity-based costing approach). (Round "cost per unit produced" to 2 decimal places.) Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2013.) (Round "cost per unit produced" to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based
costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three
manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $15 per hour and that there were no beginning
inventories. The following information was available for 2013, based on an expected production level of 50,000 units for the year, which
will require 200,000 direct labor hours:
Materials
handling
Activity Budgeted
(Cost
Costs for
2013
Driver)
Cutting
and lathe
work
Assembly
and
inspection
Units
Produced
3,200
Required:
a.
b.
Cost Driver
Used
as
Allocation
Base
$ 250,000
1,750,000
$107,200
4,000,000
Direct
Materials Costs
Cost
Allocation
Rate
Number
of parts
used
Number
of Parts Used
70,400
Number
of parts
used
Direct
labor
hours
The following production, costs, and activities occurred during the month of July:
Direct
Labor Hours
$
13,120
0.20
1.40
20.00
per
part
per
part
per
hour
Calculate the total manufacturing costs and the cost per unit of the windows
produced during the month of July (using the activity-based costing approach).
(Round "cost per unit produced" to 2 decimal places.)
Assume instead that Woodland Industries applies manufacturing overhead on a direct
labor hours basis (rather than using the activity-based costing system previously
described). Calculate the total manufacturing cost and the cost per unit of the windows
produced during the month of July. (Hint: You will need to calculate the predetermined
overhead application rate using the total budgeted overhead costs for 2013.) (Round
"cost per unit produced" to 2 decimal places.)
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