Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A manufacturing company has two Divisions: Amateur and Pro. Estimated activity for the next year is: Amateur Pro Company Total Division Division (Amateur + Pro)

A manufacturing company has two Divisions: Amateur and Pro. Estimated activity for the next year is:

Amateur Pro Company Total

Division Division (Amateur + Pro)

Direct Labour hours: 9,000 hrs 1,000 hrs 10,000 hrs

Maching Hours: 2,700 hrs 600 hrs 3,300 hrs

Units Produced: 800 units 100 units 900 units

Production Batches: 1 batch 49 batches 50 batches

Costs: Labour: $144,000

Set-ups: $ 7,500

Machining: $ 33,000

Total costs: $184,500

Other information:

  • The Amateur division makes products on a continual basis throughout the year.
  • The Pro division makes products in batches based on demand.
  • Both divisions use the same machines and the same employees.
  • There are no materials.
  • A set-up is required for each production batch.
  • Machining costs are allocated based on Machine hours.

Required

  1. What is the cost of a unit for each of the Amateur and Pro Divisions, assuming that total costs are captured in a single cost pool allocated on the basis of Direct Labour Costs (ie, no ABC)?

  1. What is the cost of a unit for each of the Amateur and Pro Divisions, assuming that the company uses Activity Based Costing?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Place Of Internal Audit And Management Control In Performance The Case Of The Bank

Authors: Hind Ben Khayat

1st Edition

6205968371, 978-6205968376

More Books

Students also viewed these Accounting questions

Question

5. Understand how cultural values influence conflict behavior.

Answered: 1 week ago

Question

e. What do you know about your ethnic background?

Answered: 1 week ago