Question

	A	B	C	D	E	F
1	Chapter 3: Applying Excel
2
3	Enter a formula into each of the cells marked with a ? below
4	Review Problem: Activity-Based Costing
5
6	Data
7		Deluxe	Tourist
8	Annual sales in units	2,000	10,000
9	Direct materials per unit	$25	$17
10	Direct labor-hours per unit	5	4
11
12	Direct labor rate	$12	per DLH
13
14		Estimated
15		Overhead	Expected Activity
16	Activities and Activity Measures	Cost	Deluxe	Tourist	Total
17	Labor related (direct labor-hours)	$ 80,000	10,000	40,000	50,000
18	Machine setups (setups)	150,000	3,000	2,000	5,000
19	Production orders (orders)	70,000	270	230	500
20	General factory (machine-hours)	250,000	12,000	28,000	40,000
21		$550,000
22	(a) What is the traditional unit product cost for the Deluxe model after this change? (c) What is the ABC unit product cost for the Deluxe model after this change? (Round your intermediate calculations and final answer to 2 decimal places.)

Answer 1

	CALCULATION OF UNIT COSTING AS PER ABC METHOD
	Particulars	Delux	Tourist
		(2, 000 Units)	(10,000 Units)
	Direct Material	$25	$17
	Direct Labour	$60	$48
		(5 Hrs X $ 12)	(4 Hrs X $ 12)
	Overhead Cost:
	Labor related (direct labor-hours)	$8.0	$6.4
	Machine setups (setups)	$45.0	$6.0
	Production orders (orders)	$18.9	$3.2
	General factory (machine-hours)	$37.5	$17.5
	Total Cost Per unit	$194.4	$98.1
	Calculation of the Cost Driver Rate Per Unit Per Product
			Total Activity of Delux	Rate of Activity	Total Activity	"/" By No. of Units	Rate Per unit
	Direct Labour Related =	$80,000	10000	$1.6	$16,000.0	2000	$8.0
	Divide by	" / "
	total Activity =	50000	Total Activity of Tourist
	Activity Rate	$1.6	40000	$1.6	$64,000.0	10000	$6.4
				Total Cost	$80,000.0
	Machiene Related =	$1,50,000.0	Total Activity of Delux	Rate of Activity	Total Activity	"/" By No. of Units	Rate Per unit
	Divide by	" / "	3000	$30.0	$90,000.0	2000	$45.0
	total Activity =	5000
	Activity Rate	$30.00	Total Activity of Tourist
			2000	$30.0	$60,000.0	10000	$6.0
				Total Cost	$1,50,000.0
	Production Orders =	$70,000.0	Total Activity of Delux	Rate of Activity	Total Activity	"/" By No. of Units	Rate Per unit
	Divide by	" / "	270	$140.0	$37,800.0	2000	$18.9
	total Activity =	500
	Activity Rate	$140.00	Total Activity of Tourist
			230	$140.0	$32,200.0	10000	$3.2
				Total Cost	$70,000.0
	General Factory Machiene - Hours	$2,50,000.0	Total Activity of Delux	Rate of Activity	Total Activity	"/" By No. of Units	Rate Per unit
	Divide by	" / "	12000	$6.3	$75,000.0	2000	$37.5
	total Activity =	40000
	Activity Rate	$6.25	Total Activity of Tourist
			28000	$6.3	$1,75,000.0	10000	$17.5
				Total Cost	$2,50,000.0