Question

4.5 Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and "OH rate and cost per unit" answers to 2 decimal places.) Product A Product B Number of units produced 11,000 units 1,700 units Direct labor cost (@ $24 per DLH) 0.15 DLH per unit 0.26 DLH per unit Direct materials cost $ 2.00 per unit $ 3.10 per unit Activity Overhead costs Machine setup $ 29,260 Materials handling 56,000 Quality control inspections 103,020 $ 188,280 Required: 4.2 Based on your results in part 4, should the profit or loss per unit for each product influence company strategy? No Yes

Cardiff and Delp is an architectural firm that provides services for residential construction projects. The following data pertain to a recent reporting period.
  

	Activities		Costs
Design department
Client consultation	1,300	contact hours	$	247,000
Drawings	2,400	design hours		144,000
Modeling	44,000	square feet		35,200
Project management department
Supervision	900	days	$	207,000
Billings	11	jobs		8,400
Collections	11	jobs		24,270

Required:
1. & 2. Using ABC, compute the firm's activity overhead rates. Form activity cost pools where appropriate. Assign costs to a 7,000-square-foot job that requires 480 contact hours, 342 design hours, and 220 days to complete. (Round activity rate answers to 2 decimal places.)

Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data.
  

	Rounded Edge				Squared Edge					Total
Direct materials		$	9,300			$	21,600		$	30,900
Direct labor			6,100				11,900			18,000
Overhead (300% of direct labor cost)			18,300				35,700			54,000
Total cost		$	33,700			$	69,200		$	102,900
Quantity produced			10,300	ft.			14,100	ft.
Average cost per ft. (rounded)		$	3.27			$	4.91

  
Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information.

Overhead Cost Category (Activity Cost Pool)	Cost
Supervision		$	2,160
Depreciation of machinery			28,840
Assembly line preparation			23,000
Total overhead		$	54,000

  
She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.)

		Usage
Overhead Cost Category (Activity Cost Pool)	Driver	Rounded Edge			Squared Edge			Total
Supervision	Direct labor cost ($)	$	6,100		$	11,900		$	18,000
Depreciation of machinery	Machine hours		300	hours		700	hours		1,000	hours
Assembly line preparation	Setups (number)		32	times		94	times		126	times

Answer 1