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Cornerstone Exercise 4.5 (Algorithmic) Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced....
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Cornerstone Exercise 4.5 (Algorithmic) 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.
Required: 1. Calculate the four activity rates.
2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.
Calculate the overhead cost per unit. Round your answers to the nearest cent.
3. What if consumption ratios instead of activity rates were used to assigned costs? Show the cost assignment for the inspection activity.
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Solutions
Expert Solution
| 1) Calculation of activity rate | ||||
| Activity | Cost (A) | Cost driver (B) | activity rate (A)/(B) | |
| Machine rate | 7800000 | 780000 | 10 | Per machine hr |
| Engineering rate | 1680000 | 4000 | 420 | per engineering hr |
| Receiving rate | 512000 | 1600 | 320 | per order |
| inspecting rate | 351000 | 2700 | 130 | per inspection hr |
| 2) Calculation of unit cost | ||||
| Unit cost | Basic | Advanced | ||
| prime cost | 9360000 | 39780000 | ||
| Machine (130000*10), (650000*10) | 1300000 | 6500000 | ||
| engineering (400*420), (3600*420) | 168000 | 1512000 | ||
| receiving (400*320), (1200*320) | 128000 | 384000 | ||
| inspection (900*130), (1800*130) | 117000 | 234000 | ||
| total cost | 11073000 | 48410000 | ||
| total unit | 130000 | 390000 | ||
| Unit cost | 85.18 | 124.13 | ||
| 3) Calculation of overhead cost per unit | ||||
| Particulars | Basic | advanced | ||
| total cost as calculated above | 11073000 | 48410000 | ||
| less: prime cost | 9360000 | 39780000 | ||
| overhead cost | 1713000 | 8630000 | ||
| total unit | 130000 | 390000 | ||
| overhead cost per unit | 13.18 | 22.13 | ||
| 4) Calculation of consumption ratio | ||||
| Particulars | Basic | advanced | total | |
| inspecting products | 900 | 1800 | 2700 | |
| Consumption ratio (900/2700),(1800/2700) | 0.33 | 0.67 | ||
| overhead assigned (351000*0.33), (351000*0.67) | 117000 | 234000 | ||
ekkarill92 answered 1 year agoRelated Solutions
Cornerstone Exercise 4.5 (Algorithmic) Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced....
Cornerstone Exercise 4.5 (Algorithmic)
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
150,000
450,000
------
Prime costs
$10,500,000
$52,200,000
$62,700,000
Machine hours
150,000
750,000
900,000
Engineering hours
400
3,600
4,000
Receiving orders
200
600
...
Cornerstone Exercise 4.5 (Algorithmic) Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced....
Cornerstone Exercise 4.5 (Algorithmic) 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
80,000 240,000 ------ Prime costs $6,720,000 $27,360,000
$34,080,000 Machine hours 80,000 400,000 480,000 Engineering hours
500 4,500 5,000 Receiving orders 200 600 800 Inspection hours 800
1,600 2,400 Overhead costs: Machining $7,200,000 Engineering
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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
100,000
300,000
—
Prime costs
$8,000,000
$30,000,000
$38,000,000
Machine hours
100,000
500,000
600,000
Engineering hours
400
3,600
4,000
Receiving orders
400
1,200
1,600
Inspection hours
...
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
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Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four...
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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 $10,560,000
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products 378,000 Required:
1. Calculate the...
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
130,000
390,000
—
Prime costs
$9,620,000
$41,340,000
$50,960,000
Machine hours
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650,000
780,000
Engineering hours
300
2,700
3,000
Receiving orders
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600
800
Inspection hours
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Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering,...
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
110,000
330,000
—
Prime costs
$8,800,000
$34,980,000
$43,780,000
Machine hours
110,000
550,000
660,000
Engineering hours
500
4,500
5,000
Receiving orders
400
1,200
1,600
Inspection hours
700
1,400...
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Activity
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