Question

In: Accounting

Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given...

Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools:

Fabrication
Department
Finishing
Department
Cost Driver
Maintenance $96 ,000 48,000 Machine hours
Materials handling 144,000 72,000 Material moves
Machine 336,000 24,000 Machine setups
Inspections

-

120,000

Inspection hours
Total

$ 576,000

$264 ,000

The following activity predictions were also made for the year:

Fabrication
Department
Finishing
Department
Machine hours 5,000 2,500
Material moves 1,500 750
Machine setups 350 25
Inspection hours - 500

It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models:

SW100 SG150
Direct materials cost $ 32,000 $ 48,000
Direct labor cost $ 12,800 $9,600
Machine hours (Fabrication) 250 350
Machine hours (Finishing) 100 50
Materials moves 20 40
Machine setups 5 10
Inspection hours 15 30

a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours.

Round rate to two decimal places.

Overhead rate based on total machine hours: $Answer

per machine hour

Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places.

Product Costs per Unit SW100 SG150
Direct materials Answer Answer
Direct labor Answer Answer
Manufacturing overhead Answer Answer
Total cost per batch Answer Answer
Number of units per batch Answer Answer
Cost per unit Answer Answer

b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments.

Round to two decimal places, if applicable.

Overhead rate based on machine hours for Fabrication Dept.: $Answer

per machine hour.

Overhead rate based on machine hours for Finishing Dept.: $Answer

per machine hour.

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.

Product Costs per Unit SW100 SG150
Direct materials Answer Answer
Direct labor Answer Answer
Manufacturing overhead:
Fabrication Dept. Answer Answer
Finishing Dept.

Answer

Answer

Total cost per batch

Answer

Answer

Number of units per batch Answer Answer
Cost per unit

Answer

Answer

c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities.

Round rate to two decimal places, if applicable.

Activity-based overhead rates:
Maintenance Answer
Materials handling Answer
Machine setup Answer
Inspection activities 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.

Product Costs per Unit SW100 SG150
Direct materials Answer Answer
Direct labor Answer Answer
Manufacturing overhead:
Maintenance activity Answer Answer
Materials handling activity Answer Answer
Machine setups activity Answer Answer
Inspections activity

Answer

Answer

Total cost per batch Answer Answer
Number of units per batch Answer Answer
Cost per unit

Answer

Answer

Solutions

Expert Solution

a) Calculation of company-wide rate

Company-wide rate = Total overhead cost of company/ total no.of machine hour

Company wide rate = 840000/7500 = 112 per machine hour

Calculation of manufacturing overhead cost (notes)

Calculation of cost per unit

b)

Calculation of department overhead rate

Calculation of manufacturing overhead (note)

Cost per unit

c)

Calculation of activity-wise overhead rate

Calculation of Manufacturing Overhead (note)

Cost per unit calculation

Please like the answer................for doubts please comment...................thank you


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