=+6-44 KK Plant-wide, department and activity-cost rates OBJECTIVES 5, 7, 10 Allen’s Aero Toys makes two models of toy aeroplanes: fighter jets and cargo planes. The fighter jets are more detailed and require smaller batch sizes. The management accountant has asked you to compare plant-wide, department and activity-based cost allocations.

Allen’s Aero Toys Budgeted information per unit for the year ended 30 November 2013 Assembly Department Fighters

$

Cargo

$

Total

$

Direct materials 2.50 3.75 6.25 Direct manufacturing labour 3.50 2.00 5.50 Total direct cost per unit 6.00 5.75 11.75 Painting Department Fighters

$

Cargo

$

Total

$

Direct materials 0.50 1.00 1.50 Direct manufacturing labour 2.25 1.50 3.75 Total direct cost per unit 2.75 2.50 5.25 Number of units produced 800 740 254 Chapter 6: Activity-based costing and activity-based management M06_HORN3377_02_LT_C06.indd 254 2/09/13 3:26 PM The budgeted overhead cost for each department is as follows:

Assembly Department

$

Painting Department

$

Total

$

Materials handling 1 700 900 2 600 Quality inspection 2 750 1 150 3 900 Utilities 2 580 2 100 4 680 Total 7 030 4 150 11 180 Other information follows:

Materials-handling and quality-inspection costs vary with the number of batches processed in each department. The budgeted number of batches for each product line in each department is as follows:

Fighters Cargo Total Assembly Department 150 48 198 Painting Department 100 32 132 Total 250 80 330 Utilities costs vary with direct manufacturing labour cost in each department.

Required 1 Calculate the budgeted cost per unit for fighter jets and cargo planes based on a single plant-wide overhead rate, if total overhead is allocated based on total direct costs.