Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

After reviewing the new activity-based costing system that Janis McGee has implemented at Joplin Industriess Port Arthur manufacturing facility, Kris Kristoff, the production supervisor, believes

After reviewing the new activity-based costing system that Janis McGee has implemented at Joplin Industriess Port Arthur manufacturing facility, Kris Kristoff, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability. He plans to produce 112,000 units of J25P and 46,000 units of J40X in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the J25P and the J40X products by 23 percent.

J25P J40X
Direct material $ 1,512,000 $ 2,424,000
Direct labor
Assembly $ 762,000 $ 624,000
Packaging 1,002,000 384,000
Total direct labor $ 1,764,000 $ 1,008,000
Direct costs $ 3,276,000 $ 3,432,000
Overhead
Assembly building
Assembling (@ $30 per mh) $ 204,000 $ 924,000
Setting up machine (@ $900 per setup hour) 42,000 372,000
Handling material (@ $3,000 per run) 30,000 132,000
Packaging building
Inspecting and Packing (@ $5 per direct labor-hour) 324,000 126,000
Shipping (@ $1,320 per shipment) 144,000 288,000
Total ABC overhead $ 744,000 $ 1,842,000
Total ABC cost $ 4,020,000 $ 5,274,000
Number of units 112,000 46,000
Unit cost $ 35.89 $ 114.65

Required:

Compute the amount of overhead allocated to the J25P and the J40X cameras for the first quarter using activity-based costing. Assume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume the cost of a setup hour remains at $900.

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

Accounting For Managers Text And Cases

Authors: William J. Bruns

3rd Edition

0324291213, 978-0324291216

More Books

Students also viewed these Accounting questions

Question

=+3. How will you measure action objective?

Answered: 1 week ago

Question

=+2. What research methodologies would be most effective?

Answered: 1 week ago

Question

=+ Focus groups with representative publics. Which publics?

Answered: 1 week ago