Question
In: Accounting
Randel Manufacturing has five activity cost pools and two products (a budget tape vacuum and a...
Randel Manufacturing has five activity cost pools and two products (a budget tape vacuum and a deluxe tape vacuum). Information is presented below:
Cost Drivers by Product
Activity Cost Pool Cost Driver Est. Overhead Budget Deluxe
Ordering and Receiving Orders $ 130,000 600 400
Machine Setup Setups 297,000 500 400
Machining Machine hours 1,000,000 150,000 100,000
Assembly Parts 1,600,000 1,200,000 800,000
Inspection Inspections 300,000 550 450
Instructions
Compute the overhead cost per unit for each product. Production is 700,000 units of Budget and 200,000 units of Deluxe. Round your answer to the nearest cent.
Solutions
Expert Solution
| Solution: A | ||||||||
| Calculation of the Cost Driver Rate | ||||||||
| Cost Driver Rate = Activity Cost / Cost Driver | ||||||||
| Activity Cost / Cost Driver = | ||||||||
| Activity | Cost Driver | Activity Cost | "/" | Cost Driver | " = " To | Cost Driver Rate | ||
| Ordering and Receiving | No. of Orders | $ 130,000 | "/" | 1,000 | " = " To | $ 130.00 | Per Direct Labor Hrs | |
| Machine Set-ups | Set-ups | $ 297,000 | "/" | 900 | " = " To | $ 330.00 | Per Direct Labor Hrs | |
| Machining | No. Machining Hrs | $ 1,000,000 | "/" | 250,000 | " = " To | $ 4.00 | Per Set-up | |
| Assembly Parts | No. of Assembly | $ 1,600,000 | "/" | 2,000,000 | " = " To | $ 0.80 | Per Inspection | |
| Inspection Parts | No. of Inspection | $ 300,000 | "/" | 1,000 | " = " To | $ 300.00 | Per Inspection | |
| Total | $ 3,327,000 | |||||||
| Solution: B | ||||||||
| Calculation of the Overhead Cost Per unit of Budget | ||||||||
| Activity | Activity Used | "X " By | Cost Driver rate | Cost | ||||
| Overhead Cost: | ||||||||
| Ordering and Receiving | 600 | "X " By | $ 130.00 | $ 78,000 | ||||
| Machine Set-ups | 500 | "X " By | $ 330.00 | $ 165,000 | ||||
| Machining | 150,000 | "X " By | $ 4.00 | $ 600,000 | ||||
| Assembly Parts | 1,200,000 | "X " By | $ 0.80 | $ 960,000 | ||||
| Inspection Parts | 550 | "X " By | $ 300.00 | $ 165,000 | ||||
| Total Cost | $ 1,968,000 | |||||||
| Divide By | "/" By | |||||||
| Total Units Produced | 700,000 | |||||||
| Cost Per Unit | $ 2.81 | |||||||
| Calculation of the Overhead Cost Per unit of Deluxe | ||||||||
| Activity | Activity Used | "X " By | Cost Driver rate | Cost | ||||
| Overhead Cost: | ||||||||
| Ordering and Receiving | 400 | "X " By | $ 130.00 | $ 52,000 | ||||
| Machine Set-ups | 400 | "X " By | $ 330.00 | $ 132,000 | ||||
| Machining | 100,000 | "X " By | $ 4.00 | $ 400,000 | ||||
| Assembly Parts | 800,000 | "X " By | $ 0.80 | $ 640,000 | ||||
| Inspection Parts | 450 | "X " By | $ 300.00 | $ 135,000 | ||||
| Total Cost | $ 1,359,000 | |||||||
| Divide By | "/" By | |||||||
| Total Units Produced | 200,000 | |||||||
| Cost Per Unit | $ 6.80 | |||||||
| Answer = |
 ekkarill92 answered 2 years agoRelated SolutionsSonoma Manufacturing has five activity cost pools and two products (a budget tape vacuum and a...Sonoma Manufacturing has five activity cost pools and two
products (a budget tape vacuum and a deluxe tape vacuum).
Information is presented below:
Cost
Drivers by Product
Activity Cost
Pool Cost
Driver Est.
Overhead Budget
Deluxe
Ordering and
Receiving Orders $ 120,000 600 400
Machine
Setup Setups 297,000 500 400
Machining Machine
hours 1,000,000 150,000 100,000
Assembly Number
of
Parts 1,600,000 1,400,000 800,000
Inspection Inspections 300,000 550 450
Instructions
Compute the estimated overhead cost per unit for each product.
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Round your answer to the nearest cent.
Assume Sonoma used a more traditional OH...
Sonoma Manufacturing has five activity cost pools and two products (a budget tape vacuum and a...
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Production is 700,000 units of Budget and 200,000 units of Deluxe.
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