Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities: Activity Activity Cost Activity Base Production setup $ 97,500 Number of setups Procurement 137,500 Number of purchase orders (PO) Quality control 187,500 Number of inspections Materials management 100,000 Number of components Total $522,500 The activity-base usage quantities for each product are as follows: Purchase Setups Inspections Components Unit Volume Orders Custom 500 1,150 2,300 300 1,000 Standard 250 100 200 200 1,000 Total 750 1,250 2,500 500 2,000 a. Determine an activity rate for each activity. Activity Rates Production Setup Materials Management Procurement Quality Control Activity cost + Activity base Activity rate /setup /PO $ /inspection $ /component

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
100%
Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality
control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities:
Activity
Activity Cost
Activity Base
Production setup
$ 97,500
Number of setups
Procurement
137,500
Number of purchase orders (PO)
Quality control
187,500
Number of inspections
Materials management
100,000
Number of components
Total
$522,500
The activity-base usage quantities for each product are as follows:
Purchase
Setups
Inspections
Components
Unit Volume
Orders
Custom
500
1,150
2,300
300
1,000
Standard
250
100
200
200
1,000
Total
750
1,250
2,500
500
2,000
a. Determine an activity rate for each activity.
Activity Rates
Production Setup
Procurement
Quality Control
Materials Management
Activity cost
- Activity base
Activity rate
$4
/setup
/PO $
/inspection $
/component
Transcribed Image Text:Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities: Activity Activity Cost Activity Base Production setup $ 97,500 Number of setups Procurement 137,500 Number of purchase orders (PO) Quality control 187,500 Number of inspections Materials management 100,000 Number of components Total $522,500 The activity-base usage quantities for each product are as follows: Purchase Setups Inspections Components Unit Volume Orders Custom 500 1,150 2,300 300 1,000 Standard 250 100 200 200 1,000 Total 750 1,250 2,500 500 2,000 a. Determine an activity rate for each activity. Activity Rates Production Setup Procurement Quality Control Materials Management Activity cost - Activity base Activity rate $4 /setup /PO $ /inspection $ /component
I eBöök
Activity Rates
Production Setup
Procurement
Quality Control
Materials Management
Activity cost
+ Activity base
Activity rate
/setup
/PO $
/inspection
/component
b. Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit costs to the nearest cent.
Custom
Standard
$
Setups Total
Purchase Orders
Total
Inspections Total
Components Total
2$
$
Total product cost
Unit volume
Unit cost
c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your
answer to the nearest cent.
per unit
Transcribed Image Text:I eBöök Activity Rates Production Setup Procurement Quality Control Materials Management Activity cost + Activity base Activity rate /setup /PO $ /inspection /component b. Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit costs to the nearest cent. Custom Standard $ Setups Total Purchase Orders Total Inspections Total Components Total 2$ $ Total product cost Unit volume Unit cost c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your answer to the nearest cent. per unit
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education