Question
In: Accounting
Smokey and the Bandit produces outdoor activity clothing. The product line consists of pants, jackets, tops,...
Smokey and the Bandit produces outdoor activity clothing. The product line consists of pants, jackets, tops, and accessories. Data has been collected related to direct materials and direct labor for the four product lines. Smokey and the Bandit has also collected information on four possible cost drivers (units, batches, machine hours, labor hours). All this information is listed below. Construct a spreadsheet that will allocate overhead for each of these alternative drivers and will calculate the total per unit cost for each product line. Use the VLOOKUP function (show them) when constructing the spreadsheet so that you can determine the effect of different cost drivers on the overhead allocated and the resulting cost per unit.
|
Product Line |
Units |
Average Sales Price per unit |
Total Material Cost |
Total Labor Cost |
|
|
Pants |
4,600 |
$73 |
$234,600 |
$20,115 |
|
|
Jackets |
2,500 |
$98 |
$145,000 |
$25,200 |
|
|
Tops |
9,800 |
$36 |
$156,800 |
$32,970 |
|
|
Accessories |
18,500 |
$12 |
$ 37,000 |
$15,210 |
|
Product Line |
Batches |
Machine Hours |
Labor Hours |
|||
|
Pants |
42 |
1,640 |
1,341 |
|||
|
Jackets |
26 |
1,730 |
1,400 |
|||
|
Tops |
78 |
2,600 |
2,198 |
|||
|
Accessories |
95 |
2,250 |
845 |
Total overhead cost to be allocated: $321,560
After constructing your spreadsheet answer the following questions?
- What is the total cost per unit of each product line when machine hours are used as the cost driver for overhead allocation?
- How much overhead is allocated to Jackets when direct labor hours are used as the cost driver for overhead allocation?
- What is the total cost of Tops when direct labor hours are used as the cost driver for overhead allocation?
- What is the total cost per unit of Accessories when the number of batches is used as the cost driver for overhead allocation?
- What is the allocation rate when units are used as the cost driver?
- If you are the manager of the Jackets product line which cost driver would you prefer? Why?
- Currently the OH cost are being allocated based on DL hours. If the company decides to use units as the cost driver how would you react if you are the Accessories product line manager?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Smokey and the Bandit produces outdoor activity clothing. The product line consists of pants, jackets, tops,...
Smokey and the Bandit produces outdoor activity clothing. The
product line consists of pants, jackets, tops, and accessories.
Data has been collected related to direct materials and direct
labor for the four product lines. Smokey and the Bandit has also
collected information on four possible cost
drivers (units, batches, machine hours, labor hours). All this
information is listed below. Construct a spreadsheet that will
allocate overhead for each of these alternative drivers and will
calculate the total per unit cost...
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Data has been collected related to direct materials and direct
labor for the five types of towels. Smokey and the Bandit has also
collected information on four possible cost
drivers (units, orders, machine hours, labor hours). All this
information is listed below.
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cost $32 and those for a pair of trousers cost $40. The company can
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waterproof hunting boots. Unfortunately, neither Teddy Bower nor
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