In: Accounting
Taylor Corporation produces two models of their leather brief cases: deluxe and standard. The four activities and four drivers are as follows:
Hours |
|||||
Activities: |
Cost |
Driver |
Deluxe |
Standard |
Total |
Cutting |
$ 96,000 |
Cutting hours |
2,200 |
1,300 |
3,500 |
Assembling |
42,000 |
Assembly hours |
1,150 |
980 |
2,130 |
Inspecting |
15,000 |
Inspection hours |
800 |
500 |
1,300 |
Reworking |
8,000 |
Rework hours |
20 |
35 |
55 |
Required:
Calculate the consumption ratios for the four drivers, rounding to 2 decimal places.
Calculate the activity rates that would be used to assign costs to each product. Round your answer to two decimal places.
Calculate the unit cost assuming that 500 deluxe models were produced and 700 standard models were produced, rounded to the nearest cent.
1) | CONSUMPTION RATIOS: | ||||||
Hours | CONSUMPTION RATIO | ||||||
Activities: | Driver | Deluxe | Standard | Total | Deluxe | Standard | |
Cutting | Cutting hours | 2,200 | 1,300 | 3,500 | 0.63 | 0.37 | |
Assembling | Assembly hours | 1,150 | 980 | 2,130 | 0.54 | 0.46 | |
Inspecting | Inspection hours | 800 | 500 | 1,300 | 0.62 | 0.38 | |
Reworking | Rework hours | 20 | 35 | 55 | 0.36 | 0.64 | |
Note: Consumption ratio for Cutting: | |||||||
For deluxe = 2200/3500 = 0.63; for standard = 1300/3500 = 0.37 | |||||||
For other activities, ratios have been worked out as above. | |||||||
2) | ACTIVITY RATES: | ||||||
Hours | |||||||
Activities: | Cost | Driver | Deluxe | Standard | Total | Activity Rates = Cost/ Total Hours | |
Cutting | 96000 | Cutting hours | 2,200 | 1,300 | 3,500 | 27.43 | |
Assembling | 42000 | Assembly hours | 1,150 | 980 | 2,130 | 19.72 | |
Inspecting | 15000 | Inspection hours | 800 | 500 | 1,300 | 11.54 | |
Reworking | 8000 | Rework hours | 20 | 35 | 55 | 145.45 | |
3) | UNIT COST: | ||||||
Units produced | 500 | 700 | |||||
Cutting | 60343 | 35657 | 96000 | ||||
Assembling | 22676 | 19324 | 42000 | ||||
Inspecting | 9231 | 5769 | 15000 | ||||
Reworking | 2909 | 5091 | 8000 | ||||
Total cost | 95159 | 65841 | 161000 | ||||
Cost per unit | $ 190.32 | $ 94.06 | |||||