Question

In: Accounting

Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in...

Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

1

Activity

Activity Cost Pool

2

Production

$251,598.00

3

Setup

92,035.00

4

Material handling

10,736.00

5

Inspection

49,833.00

6

Product engineering

136,230.00

7

Total

$540,432.00

The activity bases identified for each activity are as follows:

Activity Activity Base
Production Machine hours
Setup Number of setups
Material handling Number of parts
Inspection Number of inspection hours
Product engineering Number of engineering hours

The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

Machine Number of Number of Number of Number of
Hours Setups Parts Inspection Hours Engineering Hours Units
Alpha 970 63 84 489 123 1,354
Beta 802 123 138 272 170 1,044
Omega 435 209 266 256 185 452
Total 2,207 395 488 1,017 478 2,850

Each product requires 40 minutes per unit of machine time.

Required:

1. Activity Table - Alpha

Complete the Activity Table for Alpha.
1. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns.*
2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with Alpha.*
* If required, round all per-unit amounts to the nearest cent.
Alpha
Activity Activity-
Base Activity Activity
Usage X Rate = Cost
Production mh /mh
Setup setups /setup
Material handling parts /part
Inspection insp. hours /hour
Engineering eng. hours /hour
Total activity cost
Number of units
Activity cost per unit

2. Activity Table - beta

Complete the Activity Table for Beta.
1. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns.*
2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with Beta.*
* If required, round all per-unit amounts to the nearest cent.
Beta
Activity Activity-
Base Activity Activity
Usage X Rate = Cost
Production mh /mh
Setup setups /setup
Material handling parts /part
Inspection insp. hours /hour
Engineering eng. hours /hour
Total activity cost
Number of units
Activity cost per unit

3, Activity Table - Omega

Complete the Activity Table for Omega.
1. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns.*
2. Use the activity rates in (1) to determine the total and per-unit activity costs associated with Omega.*
* If required, round all per-unit amounts to the nearest cent.
Omega
Activity Activity-
Base Activity Activity
Usage X Rate = Cost
Production mh /mh
Setup setups /setup
Material handling parts /part
Inspection insp. hours /hour
Engineering eng. hours /hour
Total activity cost
Number of units
Activity cost per unit

Solutions

Expert Solution


Related Solutions

Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: 1 Activity Activity Cost Pool 2 Production $259,200.00 3 Setup 55,000.00 4 Material handling 9,750.00 5 Inspection 60,000.00 6 Product engineering 123,200.00 7 Total $507,150.00 The activity bases identified for...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: 1 Activity Activity Cost Pool 2 Production $278,280.00 3 Setup 82,677.00 4 Material handling 11,110.00 5 Inspection 54,918.00 6 Product engineering 144,361.00 7 Total $571,346.00 The activity bases identified for...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: 1 Activity Activity Cost Pool 2 Production $242,089.00 3 Setup 88,425.00 4 Material handling 9,253.00 5 Inspection 49,623.00 6 Product engineering 167,990.00 7 Total $557,380.00 The activity bases identified for...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: 1 Activity Activity Cost Pool 2 Production $242,089.00 3 Setup 88,425.00 4 Material handling 9,253.00 5 Inspection 49,623.00 6 Product engineering 167,990.00 7 Total $557,380.00 The activity bases identified for...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:?
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in...
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: 1 Activity Activity Cost Pool 2 Production $270,840.00 3 Setup 98,945.00 4 Material handling 10,604.00 5 Inspection 44,100.00 6 Product engineering 139,380.00 7 Total $563,869.00 The activity bases identified for...
QUESTION 1 Utilization of a Constrained Resource Westburne Company produces three products: Alpha, Omega and Beta....
QUESTION 1 Utilization of a Constrained Resource Westburne Company produces three products: Alpha, Omega and Beta. Data (per unit) concerning the three products follow: Alpha        Omega            Beta Selling price                                             $160                     $112             $140 Less variable expenses:            Direct materials                                48                         30                 18            Labour and overhead                       48                         54                 80 Total variable expenses                              96                         84                 98 Contribution margin                                 $64                     $28             $42 Contribution margin ratio                         40%              25%            30% Demand for the company's...
A company manufactures three products, Alpha, Beta, and Gama. Total overhead costs amount to $ 560,000....
A company manufactures three products, Alpha, Beta, and Gama. Total overhead costs amount to $ 560,000. The company allocates these costs to products based on a predetermined overhead rate, calculated by dividing $ 560,000 by the total number of budgeted direct labor hours. This number for the current year is 70,000 hours. • Alfa used 12,000 hours and 16,000 units were produced • Beta used 24,000 hours and 19,200 units were produced • Gama used 34,000 hours and 20,000 units...
Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively....
Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 30 $ 10 Direct labor 22 29 Variable manufacturing overhead 20 13 Traceable fixed manufacturing overhead...
Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively....
Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its average cost per unit for each product at this level of activity are given below: The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT