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ABC, process costing. Walsh Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here: Mathematical Financial
ABC, process costing. Walsh Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here:
Mathematical | Financial | |
---|---|---|
Annual production in units | 25,000 | 50,000 |
Direct material costs | $75,000 | $150,000 |
Direct manufacturing labor costs | $25,000 | $50,000 |
Direct manufacturing labor-hours | 1,250 | 2,500 |
Machine-hours | 40,000 | 70,000 |
Number of production runs | 50 | 50 |
Inspection-hours | 1,200 | 800 |
Total manufacturing overhead costs are as follows:
Total | |
---|---|
Machining costs | $440,000 |
Setup costs | 110,000 |
Inspection costs | 120,000 |
Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.
Compute the manufacturing cost per unit for each product.
How might Walshs managers use the new cost information from its activity-based costing system to better manage its business?
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