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Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four...

Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 120,000 360,000 ------ Prime costs $9,840,000 $40,320,000 $50,160,000 Machine hours 120,000 600,000 720,000 Engineering hours 400 3,600 4,000 Receiving orders 200 600 800 Inspection hours 900 1,800 2,700 Overhead costs: Machining $6,480,000 Engineering 1,840,000 Receiving 192,000 Inspecting products 459,000 Required: 1. Calculate the four activity rates. Machining rate $ 10 per machine hour Engineering rate $ 420 per hour Receiving rate $ 370 per order Inspecting rate $ 120 per hour 2. Calculate the unit costs using activity rates. Round your answers to the nearest cent. Unit cost Basic $ per unit Advanced $ per unit Calculate the overhead cost per unit. Round your answers to the nearest cent. Overhead Cost Basic $ per unit Advanced $ per unit 3. What if consumption ratios instead of activity rates were used to assigned costs? Show the cost assignment for the inspection activity. Cost assignment Basic $ Advanced $

Solutions

Expert Solution

Ques 1
Machining engg receiving inspecting products
costs(a) 6480000 1840000 192000 459000
no. of activity(b) 720000 4000 800 2700
rate(a/b) 9 460 240 170
Ques 2
Basic Advanced
Prime costs 9840000 40320000
Overhead costs
machining
9*120000 1080000
9*600000 5400000
engineering
460*400 184000
460*3600 1656000
receiving
240*200 48000
240*600 144000
inspecting
170*900 153000
170*1800 306000
total manufacturing costs 11305000 47826000
units of production 120000 360000
unit cost $           94.21 $ 132.85
total unit cost $           94.21 $ 132.85
Prime cost per unit $           82.00 $ 112.00
overhead cost per unit $           12.21 $    20.85
Ques 3
Basic Advanced
inspecting activity 900 1800
total activity 2700
% 33% 67%
total costs 459000
allocated 153000 306000
this same as with using activity rates

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