ABC Group Assignment Version 5.4 and 5.12 Saved A breakdown of the manufacturing cost for each of CarryAll's product lines follows: 2 Standard Briefcases Specialty Briefcases Units produced each month Direct materials: 12,90 2,750 Leather $ 20.00 $19.99 Fabric 1.0.2 1.0.2 0.52 1.0 m2 10 points 6.90 6.90 6.90 23.80 Synthetic Total materials Direct labour Manufacturing overhead Unit product cost 26.90 4.75 10.00 0.5 h @ $ 9.50 0.5 h @ $20.00 4.75 0.5 h @ $ 9.50 0.5 h $20.00 eBook 10.ee $ 41.65 $38.55 Print Manufacturing overhead is applied to products on the basis of direct labour-hours. The rate of $20 per direct labour-hour is determined by dividing the total manufacturing overhead cost for a month by the direct labour-hours: Manufacturing overhead cost, $164,745 Direct labour-hours, 8,237 - $20 per DLH The following additional information is available about the company and its products a. Standard briefcases are produced in batches of 240 units, and specialty briefcases are produced in batches of 25 units. Thus, the company performs 170 setups each month (95 setups for the standard items and 190 setups for the specialty items). A setup for the standard items requires one hour, whereas a setup for the specialty items requires two hours. b. All briefcases are inspected to ensure that quality standards are met. A total of 600 hours of inspection time is spent on the standard briefcases and 800 hours of inspection time is spent on the specialty briefcases each month c. A standard briefcase requires 0.5 hours of machine time, and a specialty briefcase requires 2.5 hours of machine time d. The company is considering using ABC as an alternative to its traditional costing system for computing unit product costs. Since these unit product costs will be used for external financial reporting, all manufacturing overhead costs are to be allocated to products, and nonmanufacturing costs are to be excluded from product costs. The ABC system has already been designed and costs allocated to the activity cost pools. The activity cost pools and activity measures follow ABC Group Assignment Version 5.4 and 5.12 Saved 2 Activity Cost Pool Purchasing Materials handling Production orders and setup Inspection Frame assembly Machine related Activity Measure Number of orders Number of receipts Setup-hours Inspection-hours Assembly-hours Machine-hours Estimated Overhead Cost $ 14,220 16,900 49,875 35,000 14,250 34,500 $ 164,745 10 points eBook Print Required: 1. Using ABC, determine the amount of manufacturing overhead cost that would be applied to each standard briefcase and each specialty briefcase. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Standard Briefcases Specialty Briefcases Activity Amount Activity Amount 29 51 56 84 140 51 19 Purchasing order Leather Fabric Synthetic Material handling receipt Leather Fabric Synthetic Production orders and equipment setup Inspection Frame assembly Machine related Total overhead cost 79 19 170 950 950
