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Product-Costing Accuracy, Consumption Ratios Plata Company produces two products: a mostly handcrafted soft leather briefcase sold under the label Maletin Elegant and a leather briefcase produced largely through automation and sold under the label Maletin Fina. The two products use two overhead activities, with the following costs: Setting up equipment $ 7,000 20,000 Machining The controller has collected the expected annual prime costs for each briefcase, the machine hours, the setup hours, and the expected production. Elegant Fina Direct labor $9,000 $3,000 Direct materials Units $3,000 $3,000 3,000 4,500 100 3,000 500 100 Machine hours Setup hours Required: 1. Conceptual Connection: Do you think that the direct labor costs and direct materials costs are accurately traced to each briefcase? Explain. Yes. Because direct materials and direct labor are directly traceable to each product, their cost 2. Calculate the consumption ratios for each activity. Round your answers to one decimal place. Elegant Fina Machining Setups 3a. Calculate the overhead cost per unit for each briefcase by using a plantwide rate based on direct labor costs. Round to the nearest cent. (Note: Do not round intermediate calculations.) Elegant $ per briefcase Fina per briefcase 3b. Based on your calculations above which of the following statements is correct? More machine and setup costs are assigned to Elegant than Fina. 4. Conceptual Connection: Calculate the overhead cost per unit for each briefcase by using overhead rates based on machine hours and setup hours. Round your answers to the nearest cent. Elegant $ per unit Fina per unit Tristar Manufacturing produces two types of battery-operated toy soldiers: infantry and special forces. The soldiers are produced by using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows: Product Machine Hours Setups Receiving Orders Packing Orders Infantry 20,900 300 810 1,620 Special Forces 20,900 100 90 810 Costs $96,140 $24,320 $16,290 $29,160 Required: 1. Calculate the total overhead assigned to each product by using only machine hours to calculate a plantwide rate. (Round overhead rate answer to two decimal places and other answers to the nearest dollar.) 2. Calculate consumption ratios for each activity. (Round to two decimal places.) 3. Calculate a rate for each activity by using the associated driver. (Round to two decimal places.) 4. Assign the overhead costs to each product by using the activity rates computed in Requirement 3. 5. CONCEPTUAL CONNECTION: Comment on the difference between the assignment in Requirement 1 and the activity-based assignment. 1. Calculate the total overhead assigned to each product by using only machine hours to calculate a plantwide rate. (Round overhead rate answer to two decimal places and other answers to the nearest dollar.) The overhead rate is per machine hour. The total overhead assigned to the infantry product is $ The total overhead assigned to the Special Forces product is $ 2. Calculate consumption ratios for each activity. (Round your answers to two decimal places.) Consumption Ratios Infantry Special Forces Overhead Activity Machining Setups Receiving Packing 3. Calculate a rate for each activity by using the associated driver. Machining: per machine hour Setups: per setup per receiving order Receiving: Packing: per packing order 4. Assign the overhead costs to each product by using the activity rates computed in Requirement 3. Tristar Manufacturing Overhead Assignment Infantry Special Forces 2 Machining 3 Setups 4 Receiving 5 Packing 6 Total 5. CONCEPTUAL CONNECTION: Complete the statements below on the difference between the assignment calculated in Requirement 1 and the activity-based assignment. Using only machine hours the special forces product. The the infantry product and reveal this before the actual calculations are made
