Gaffel Company produces two types of calculators: scientific and business. Both products pass through two producing departments.
Question:
Gaffel Company produces two types of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the more popular. The following budgeted data have been gathered for these two products:
All budgeted items have exactly occurred during the year.
Required:
1. Compute the overhead cost per unit for each product using a plantwide, direct labor hours rate.
2. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for department 1 and direct labor hours for department 2. Repeat using direct labor hours for department 1 and machine hours for department 2.
3. Compute the overhead cost per unit for each product using activity-based costing.
4. Comment on the ability of departmental rates to improve the accuracy of productcosting.
Step by Step Answer:
Cost Management Accounting And Control
ISBN: 101
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan