Activity-Based Costing, Reducing the Number of Drivers and Equal Accuracy Reducir, Inc., produces two different types of
Question:
Activity-Based Costing, Reducing the Number of Drivers and Equal Accuracy Reducir, Inc., produces two different types of hydraulic cylinders. Reducir produces a major subassembly for the cylinders in the Cutting and Welding Department. Other parts and the subassembly are then assembled in the Assembly Department. The activities, expected costs, and drivers associated with these two manufacturing processes are given below. Process Activity Cost Activity Driver Expected Quantity Cutting and Welding Welding $ 776,000 Welding hours 4,000 Machining 450,000 Machine hours 10,000 Inspecting 448,250 No. of inspections 1,000 Materials handling 300,000 No. of batches 12,000 Setups 240,000 No. of setups 100 $2,214,250 Assembly Changeover $ 180,000 Changeover hours 1,000 Rework 61,750 Rework orders 50 Testing 300,000 No. of tests 750 Materials handling 380,000 No. of parts 50,000 Engineering support 130,000 Engineering hours 2,000 $1,051,750 Other overhead activities, their costs, and drivers are listed below. Activity Cost Activity Driver Quantity Purchasing $ 135,000 Purchase requisitions 500 Receiving 274,000 Receiving orders 2,000 Paying suppliers 225,000 No. of invoices 1,000 Providing space and utilities 100,000 Machine hours 10,000 Total $ 734,000 Other production information concerning the two hydraulic cylinders is also provided: Cylinder A Cylinder B Units produced 1,500 3,000 Welding hours 1,600 2,400 Machine hours 3,000 7,000 Inspections 500 500 Moves 7,200 4,800 Batches 45 55 Changeover hours 540 460 Rework orders 5 45 No. of tests 500 250 Parts 40,000 10,000 Engineering hours 1,500 500 Requisitions 425 75 Receiving orders 1,800 200 Invoices 650 350 Required: 1. Using a plantwide rate based on machine hours, calculate the total overhead cost assigned to each product and the unit overhead cost. If required, round your unit overhead cost answers to the nearest cent. Total Overhead Cost Unit Overhead Cost Cylinder A $fill in the blank 1 $fill in the blank 2 800 Cylinder B $fill in the blank 3 $fill in the blank 4 933.33 2. Using activity rates, calculate the total overhead cost assigned to each product and the unit overhead cost. If required, round interim calculations to the nearest cent, and final answers to the nearest dollar. Total Overhead Cost Unit Overhead Cost Cylinder A $fill in the blank 5 $fill in the blank 6 Cylinder B $fill in the blank 7 $fill in the blank 8 3. Calculate the global consumption ratios. Round your answers to two decimal places. Global Consumption Ratios Cylinder A fill in the blank 9 Cylinder B fill in the blank 10 4. Calculate the consumption ratios for welding and materials handling (Assembly). Round your answers to two decimal places. Cylinder A Cylinder B Welding fill in the blank 11 194 fill in the blank 12 Materials handling fill in the blank 13 fill in the blank 14 5. Calculate the consumption ratios for inspection and engineering. Round your answers to two decimal places. Cylinder A Cylinder B Inspection fill in the blank 15 fill in the blank 16 Engineering