Activity-based costing The Fishburn plant of Hibeem Electronics Corporation LO 1, 3, 4, 5 makes two types

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Activity-based costing The Fishburn plant of Hibeem Electronics Corporation LO 1, 3, 4, 5 makes two types of wafers, W101 and W202, for electronic instruments. The old cost accounting system at the plant traced support costs to three cost pools.image text in transcribed

Pool S included all service activity costs at the plant. Pools PI and P2 in¬ cluded support costs traced directly to the two production departments, pho¬ tolithography and assembly, respectively.
The old cost accounting system allocated costs in pool S to the two pro¬ duction departments on the basis of machine hours. Then the accumulated costs in PI and P2 were applied to the products on the basis of direct labor hours. A separate rate was computed for each of the two production depart¬ ments. The direct labor wage rate is $20 per hour. The following data were compiled from plant records for January:image text in transcribed

Now the plant has implemented an activity-based costing system. The fol¬ lowing table presents the amounts from the old cost pools that are traced to each of the new activity cost pools.image text in transcribed

REQUIRED

(a) Determine the product costs per unit using the old system. Show all inter¬ mediate steps for allocations, including departmental cost driver rates and a breakdown of product costs into each of their components.

(b) Determine the product costs per unit using the new system.

(c) Explain the intuitive reason that the product costs are different under the two accounting systems.

(d) What should Hibeem Electronics Corporation do to improve the prof¬ itability of its Fishburn plant?
1.0 1,3,4

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Management Accounting

ISBN: 9780130101952

3rd Edition

Authors: Anthony A. Atkinson, Robert S. Kaplan, S. Mark Young, Rajiv D. Banker, Pajiv D. Banker

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