Oscar, Inc. manufactures bookcases and uses an activity-based costing system. Oscar's activity areas and related data...
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Oscar, Inc. manufactures bookcases and uses an activity-based costing system. Oscar's activity areas and related data follow: 1. Standard $62 per unit Budgeted Cost of Activity Predetermined Overhead Activity Allocation Base Allocation Rate Materials handling $ 240,000 Number of parts $ 1.00 Assembly 3,500,000 Number of assembling direct labor hours 17.00 Finishing 190,000 Number of finished units 4.50 "Refers to number of units receiving the finishing activity, not the number of units transferred to Finished Goods Inventory Oscar produced two styles of bookcases in October: the standard bookcase and an unfinished bookcase, which has fewer parts and requires no finishing. The totals for quantities, direct materials costs, and other data follow: Total Units Produced Total Direct Materials Costs Total Number Total Assembling Direct of Parts Total Direct Product Labor Costs Labor Hours Standard bookcase 7,000 $ 91,000 $ 105,000 28,000 10,500 Unfinished bookcase 7,500 82,500 75,000 22,500 7,500 Requirements 1. Compute the manufacturing product cost per unit of each type of bookcase. 2. Suppose that pre-manufacturing activities, such as product design, were assigned to the standard bookcases at $5 each and to the unfinished bookcases at $3 each. Similar analyses were conducted of post-manufacturing activities such as distribu- tion, marketing, and customer service. The post-manufacturing costs were $20 per standard bookcase and $18 per unfinished bookcase. Compute the full product costs per unit. 3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference. 4. What price should Oscar's managers set for unfinished bookcases to earn a net profit of $19 per bookcase? Oscar, Inc. manufactures bookcases and uses an activity-based costing system. Oscar's activity areas and related data follow: 1. Standard $62 per unit Budgeted Cost of Activity Predetermined Overhead Activity Allocation Base Allocation Rate Materials handling $ 240,000 Number of parts $ 1.00 Assembly 3,500,000 Number of assembling direct labor hours 17.00 Finishing 190,000 Number of finished units 4.50 "Refers to number of units receiving the finishing activity, not the number of units transferred to Finished Goods Inventory Oscar produced two styles of bookcases in October: the standard bookcase and an unfinished bookcase, which has fewer parts and requires no finishing. The totals for quantities, direct materials costs, and other data follow: Total Units Produced Total Direct Materials Costs Total Number Total Assembling Direct of Parts Total Direct Product Labor Costs Labor Hours Standard bookcase 7,000 $ 91,000 $ 105,000 28,000 10,500 Unfinished bookcase 7,500 82,500 75,000 22,500 7,500 Requirements 1. Compute the manufacturing product cost per unit of each type of bookcase. 2. Suppose that pre-manufacturing activities, such as product design, were assigned to the standard bookcases at $5 each and to the unfinished bookcases at $3 each. Similar analyses were conducted of post-manufacturing activities such as distribu- tion, marketing, and customer service. The post-manufacturing costs were $20 per standard bookcase and $18 per unfinished bookcase. Compute the full product costs per unit. 3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference. 4. What price should Oscar's managers set for unfinished bookcases to earn a net profit of $19 per bookcase?
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Manufacturing Overhead Cost A B CAB D EAD Standard Bookcase Unfinished Bookcase Allocation rate Acti... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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