Traditional Product Costing versus Activity-Based Costing Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs $734,400 Number of setups 7,200 Ordering costs 195,000 Number of orders 65,000 Maintenance 1,380,000 Number of machine hours 80,000 Power 132,000 Number of kilowatt hours 440,000 Total predicted direct labor hours for next year is 39,000. The following data are for two recently completed jobs: Job 201 Job 202 Cost of direct materials $11,500 $13,000 Cost of direct labor $19,600 $63,300 Number of units completed 1,000 850 Number of direct labor hours 220 270 Number of setups 15 19 Number of orders 21 42 Number of machine hours 460 360 Number of kilowatt hours 200 300 a. Determine the unit cost for each job using a traditional plantwide overhead rate based on direct labor hours. Round cost per unit answers to two decimal places when applicable. Job 201 Job 202 Direct materials $Answer $Answer Direct labor Answer Answer Overhead Answer Answer Total cost $Answer $Answer Units produced Answer Answer Cost per unit $Answer $Answer b. Determine the unit cost for each job using ABC. Round cost per unit answers to two decimal places when applicable. Job 201 Job 202 Direct materials $Answer $Answer Direct labor Answer Answer Setup cost Answer Answer Ordering costs Answer Answer Maintenance costs Answer Answer Power Answer Answer Total job costs $Answer $Answer Units produced Answer Answer Cost per unit $Answer $Answer

Traditional Product Costing versus Activity-Based Costing
Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year:

Total predicted direct labor hours for next year is 26,000. The following data are for two recently completed jobs:

a. Determine the unit cost for each job using a traditional plantwide overhead rate based on direct labor hours.
Round cost per unit answers to two decimal places when applicable.

b. Determine the unit cost for each job using ABC. Round cost per unit answers to two decimal places when applicable.

Highland Company produces a lightweight backpack that is popular with college students. Standard variable costs relating to a single backpack are given below:

Overhead is applied to production on the basis of direct labor-hours. During March, 600 backpacks were manufactured and sold. Selected information relating to the month’s production is given below:

*For the month's production.

The following additional information is available for March’s production:

Required:

1. What is the standard cost of a single backpack?

2. What was the actual cost per backpack produced during March? (Round your answers to 2 decimal places.)

3. How many yards of material are required at standard per backpack?

4. What was the materials price variance for March if there were no beginning or ending inventories of materials? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

5. What is the standard direct labor rate per hour?

6. What was the labor rate variance for March? The labor efficiency variance? (Do not round your intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance))

7. What was the variable overhead rate variance for March? The variable overhead efficiency variance? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance))

8. Prepare a standard cost card for one backpack. (Round your answers to 2 decimal places.)

“Blast it!” said David Wilson, president of Teledex Company. “We’ve just lost the bid on the Koopers job by $4,000. It seems we’re either too high to get the job or too low to make any money on half the jobs we bid.”

Teledex Company manufactures products to customers’ specifications and uses a job-order costing system. The company uses a plantwide predetermined overhead rate based on direct labor cost to apply its manufacturing overhead (assumed to be all fixed) to jobs. The following estimates were made at the beginning of the year:

Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows:

Required:

1. Using the company's plantwide approach:

a. Compute the plantwide predetermined rate for the current year.

b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.

2. Suppose that instead of using a plantwide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Under these conditions:

a.Compute the predetermined overhead rate for each department for the current year.

b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.

4. Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead).

a.What was the company’s bid price on the Koopers job using a plantwide predetermined overhead rate?

b.What would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost?

1a) Using the company's plant wide approach. Compute the plant wide predetermined rate for the current year.

Predetermined overhead rate:__________% of direct labor cost

1b) Using the company's plant wide approach. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.

Manufacturing overhead cost applied___________

2a) Suppose that instead of using a plant wide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Compute the predetermined overhead rate for each department for the current year.

Predetermined Overhead Rate:

Fabricating department_______% of direct labor cost

Machining department _______% of direct labor cost

Assembly department _______% of direct labor cost

2b) Suppose that instead of using a plant wide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.

Manufacturing overhead cost applied ________

4a) Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). What was the company’s bid price on the Koopers job using a plant wide predetermined overhead rate?

Company's bid price________

4b) Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). What would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost?

Manufacturing overhead cost applied __________

Section A1: All staff members receive an annual bonus of $200 plus an additional percentage of their Annual Income. Each staff member has been allocated their own percentage bonus rate (column C). In D6:D16 calculate each staff members Bonus

Section A2: Using the % Superannuation given to all staff. Calculate the annual Super amount paid to each staff member using the value in 9.5%. Copy the formula down to the last cell (to get full marks, a named range or an absolute cell reference must be used).

Section A3: In 'total package' calculate the total package for each staff member (Annual Salary, Bonus and Super). Adjust the spreadsheet so that the “#####” problem is addressed.

Section A4: Find total labour cost

Section A5: Inserest a row under the total labour cost and find the average total package

Section A6: use a formula to calculate the highest Total Package paid to an individual staff member (i.e. the biggest total package)

PLEASE PROVIDE AN EXPLAINATIONS during each step

Table is provided below.

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price? (show your work)

Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:

Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product.

Required:

1. Assuming the estimated variable manufacturing overhead cost per unit is $0.40, what must be the estimated total fixed manufacturing overhead cost per quarter? Answer: $172,000

2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter? Answer: $4.64

3. What is causing the estimated unit product cost to fluctuate from one quarter to the next? Answer:The fixed portion of hte manufacturing overhead cost is causing the unit porduct costs to flucuate.  

4. Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. ***I need help on this one***