Question

1. Parker Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here:

	Mathematical	Financial
Annual production in units	50,000	100,000
Direct material costs	$150,000	$300,000
Direct manufacturing labor costs	$ 50,000	$100,000
Direct manufacturing labor-hours	2,500	5,000
Machine-hours	25,000	50,000
Number of production runs	50	50
Inspection hours	1,000	500

Total manufacturing overhead costs are as follows:

Total Machining costs            $375,000

Setup costs                              $120,000

Inspection costs                      $105,000

1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product. (1.5 pt)

2. Compute the manufacturing cost per unit for each product using Activity-based Costing.(2 pts)

solve it in Microsoft word please

Answer 1

ans 1
					Mathematical	Fina
	Cost driver	Cost	Total activity	Cost per activity C	Activity A	Cost alloacted C*A	Activity B	Cost alloacted C*B
Machining costs	Machine hours	$375,000	75000	$5	25000	$125,000	50000	$250,000
Setup costs	No. of production runs	120000	100	$1,200	50	$60,000	50	$60,000
Inspection costs	Inspection hours	105000	1500	$70	1000	$70,000	500	$35,000
	Total M	$600,000				$255,000		$345,000
			Total units T		50000		100000
		Manufacturing overhead cost per unit M/T	$5.10		$3.45
ans 2
Manufacturing cost per unit
	Mathematical	Financial
Direct material cost	$3	$3
	(150000/50000)
Direct labor	$1	$1
	(50000/50000)	100000/100000
Manufacturing overhead	$5.10	$3.45
Manufacturing cost per unit	$9.10	$7.45
If any doubt please comment