Activity-Based Costing
Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools: Fabrication Finishing Department Department Cost Driver Maintenance $ 54,000 27,000 Machine hours Materials handling 40,500 Material moves Machine 189,000 13,500 Machine setups Inspections 67,500 Inspection hours Total $ 324,000 $ 148,500 81,000 The following activity predictions were also made for the year: Fabrication Finishing Department Department Machine hours 5,000 2,500 Material moves 1,500 750 Machine setups 350 25 Inspection hours 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models: SW100 SG150 Direct materials cost $ 18,000 $ 27,000 Direct labor cost $ 7,200 $5,400 Machine hours (Fabrication) 250 350 Machine hours (Finishing) 100 50 Materials moves 20 40 Machine setups 5 10 Inspection hours 15 30 a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours. Round rate to two decimal places. Overhead rate based on total machine hours: $ 0 per machine hour Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places. Product Costs per Unit SW100 SG150 Direct materials 0 $ 0 Direct labor 0 0 Manufacturing overhead 0 0 Total cost per batch 0 $ 0 Number of units per batch 0 Cost per unit 0 $ 0 b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments. Round to two decimal places, if applicable. Overhead rate based on machine hours for Fabrication Dept.: $ 0 per machine hour. 0 Overhead rate based on machine hours for Fabrication Dept.: $ 0 per machine hour. Overhead rate based on machine hours for Finishing Dept.: $ 0 per machine hour. $ 0 $ 0 0 0 Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Direct labor Manufacturing overhead: Fabrication Dept. Finishing Dept. Total cost per batch 0 0 0 0 $ 0 $ 0 0 0 Number of units per batch Cost per unit $ 0 $ 0 c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities. Round rate to two decimal places, if applicable. Activity-based overhead rates: Maintenance $ 0 Materials handling $ 0 Machine setup $ 0 Inspection activities $ 0 Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. SW100 SG150 $ 0 $ 0 0 0 0 0 Product Costs per Unit Direct materials Direct labor Manufacturing overhead: Maintenance activity Materials handling activity Machine setups activity Inspections activity Total cost per batch Number of units per batch Cost per unit 0 0 0 0 0 0 $ 0 $ 0 0 0 $ 0 $ 0 Check
