MANAGERIAL ACCT FOR MANAGERS LL\AC
5th Edition
ISBN: 9781265872298
Author: Noreen
Publisher: MCG
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Chapter 3A, Problem 3A.3E
1.
To determine
Introduction:
To compute: The unit products cost for D and S products using the company’s traditional costing system.
2.
To determine
Introduction: Job costing is a technique of determine the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order is determined as predetermined overhead. Absorption costing is used to calculate the cost of product while taking indirect and direct expense into account. Activity based costing assign the cost of all the activity of the organization according to their actual consumption
To compute: The unit products cost for two products using activity based costing system.
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Problem 1 (adapted)Kai Corp. manufactures two models of beds, the standard and the deluxe model.
The following activity and cost information has been compiled:Standard Deluxe OH CostsNo. of setups 9 21 P 90,000No. of components 90 150 210,000No. of DLH 650 150Required:Compute the total amount of overhead costs assigned to each model using:
1. Traditional costing system2. Activity-based costing system3. Discuss the effects of the difference in the computed amounts of overheadcosts.
CASE
Traditional Costing and Activity Based Costing (ABC)
Almarai Company Ltd manufactures two types of Sprizzer - Classic and Luxury. Each product requires the incorporation of a difficult-to-handle special part (one of them for a
Classic and four for a Luxury). Both of these products are made in batches (large batches for Classic and small ones for Luxury). Each new batch requires that the production
facilities are 'set up'. Details of the two products are:
Annual production and sales - units
Sales price per unit
Batch size - units
Direct labour time per unit-hours
Direct labour rate per hour
Direct material cost per unit.
Number of special parts per unit
Number of set-ups per batch.
Number of separate material issues from stores per batch
Number of sales invoices issued per year
Management Accounting-1/Anigament
Overhead cost analysis
Set-up cost
Special part handling cost
Customer invoicing cost
Material handling cost
Other overheads
Required:
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Shinas
Management…
Knowledge Check
Bluebean Incorporated produces two lines of coffee cups: espresso coffee cups and travel coffee mugs. The unit cost
information is shown here. The company uses a traditional volume-based costing system and believes that the number of labor
hours is the appropriate cost driver.
Activity Cost Pool
Selling price
Direct materials
Direct labor
Units produced
Direct labor hours
Estimated total overhead costs
Item Number 1-Predetermined overhead rate
Item Number 2- Total manufacturing overhead allocated
Item Number 3-Manufacturing cost per unit
Item Number 4-Gross profit per unit
Espresso Coffee Cups
$ 20
$6
$2
10,000 units
10,000 hours
$ 80,000
Travel Coffee Mugs
$ 25
58
$5
4,000 units
6,000 hours
Espresso Coffee Cups
Travel Coffee Mugs
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