In: Accounting
Traditional Product Costing Versus Activity-Based Costing
Assume that Panasonic Company has determined its estimated total
manufacturing overhead cost for one of its plants to be $252,000,
consisting of the following activity cost pools for the current
month:
Activity Centers |
Activity Costs |
Cost Drivers |
Activity Level |
---|---|---|---|
Assembly setups | $69,000 |
Setup hours |
1,500 |
Materials handling | 39,000 |
Number of moves |
300 |
Assembly | 120,000 |
Assembly hours |
12,000 |
Maintenance | 24,000 | Maintenance hours | 1,200 |
Total | $252,000 |
Total direct labor hours used during the month were 8,000. Panasonic produces many different electronic products, including the following two products produced during the current month:
Model X301 | Model Z205 | |
---|---|---|
Units produced | 1,000 | 1,000 |
Direct materials costs | $39,000 | $39,000 |
Direct labor costs | $36,500 | $36,500 |
Direct labor hours | 500 | 500 |
Setup hours | 50 | 100 |
Materials moves | 25 | 50 |
Assembly hours | 800 | 800 |
Maintenance hours | 10 | 40 |
a. Calculate the total per-unit cost of each model using direct
labor hours to assign manufacturing overhead to products.
Round rate to two decimal places.
Overhead rate per direct labor hour $Answer
Use rounded overhead rate calculated above for calculations below.
Round cost answers to the nearest whole number, when needed. Round
cost per unit to two decimal places, if needed.
X301 | Z205 | |
---|---|---|
Direct materials | Answer | Answer |
Direct labor | Answer | Answer |
Overhead cost | Answer | Answer |
Total cost | Answer | Answer |
Units | Answer | Answer |
Per unit cost | Answer | Answer |
b. Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.
Assembly setups |
Answer |
Materials handling |
Answer |
Assembly |
Answer |
Maintenance |
Answer |
Round cost per unit to two decimal places, if needed.
X301 | Z205 | |
---|---|---|
Direct materials cost | Answer | Answer |
Direct labor cost | Answer | Answer |
Manufacturing overhead costs: | ||
Assembly setup | Answer | Answer |
Materials handling | Answer | Answer |
Assembly | Answer | Answer |
Maintenance | Answer | Answer |
Total cost | Answer | Answer |
Units | Answer | Answer |
Per unit cost | Answer | Answer |
(a) Calculate the total per-unit cost of each model using direct labor hours to assign manufacturing overhead to products :-
Overhead rate per direct labor hour = Overhead/Direct Labor hours
= $252000/8000 = $31.50
X301 | Z205 | |
Direct materials | $39,000 | $39,000 |
Direct labor | $36,500 | $36,500 |
Overhead cost |
(500 * $31.50) =$15750 |
(500 * $31.50) =$15750 |
Total cost | $91,250 | $91,250 |
Units | 1000 | 1000 |
Per unit cost | $91.25 | $91.25 |
(b) Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products:-
Assembly setups ($69000/1500) | $46 |
Materials handling ($39000/300) | $130 |
Assembly ($120000/12000) | $10 |
Maintenance ($24000/1200) | $20 |
X301 | Z205 | |
Direct materials | $39,000 | $39,000 |
Direct labor | $36,500 | $36,500 |
Manufacturing overhead costs: | ||
Assembly setup |
(50 * $46) =$2,300 |
(100 * $46) =$4,600 |
Materials handling |
(25 * $130) =$3,250 |
(50 * $130) =$6,500 |
Assembly |
(800 * $10) $8,000 |
(800 * $10) $8,000 |
Maintenance |
(10 * $20) =$200 |
(40 * $20) =$800 |
Total cost | $89,250 | $95,400 |
Units | 1000 | 1000 |
Per unit cost | $89.25 | $95.40 |