b. The company's ABC system uses two indirect-cost pools. One cost pool is for set up costs and the other for advertising, Zany Brainy allocates set up costs to the two lamps based on setup labour-hours and advertising costs based on the direct manufacturing labour-hours. Under ABC system, determine total product cost per unit of each of the company's two products. (25 marks) Answer following questions based on the scenario of Zany Brainy: Zany Brainy Corp. manufactures two types of lamps, Home size and Industry size lamps. Company produces 10,000 Home size lamps and 2,000 Industry size lamps. Following is the data provided about these two products: Home size Industry size lamp lamp Total $10 S15 $16.00 $16.00 Direct materials per unit Direct manufacturing labor rate per unit Direct labor hours per unit 0.50 0.7 $110,000 200 50 Set up 1 3 Set up costs Lamps produced per patch hour per patch Advertising costs Total indirect manufacturing costs Annual production $150,000 I $260,000 10,000 2.000 Annual production 10.000 2,000 Page Break end The company's simple (traditional) costing system uses a single indirect- cost pool and allocates costs to the two lamps on the basis of direct manufacturing labor-hours. Under this traditional system, determine total product cost per unit of each of the company's two products. (10 marks) I b. The company's ABC system uses two indirect-cost pools. One cost pool is for set up costs and the other for advertising. Zany Brainy allocates set up costs to the two lamps based on setup labor-hours and advertising costs based on the direct manufacturing labor-hours. Under ABC system, 19 O Suggested time: 45 minutes Answer following questions based on the scenario of Zany Brainy: Zany Brainy Corp. manufactures two types of lamps, Home size and Industry size lamps. Company produces 10,000 Home size lamps and 2,000 Industry size lamps. Following is the data provided about these two products: Total Home size Industry size lamp lamp $10 S15 $16.00 $16.00 Direct materials per unit Direct manufacturing labor rate per unit Direct labor hours per unit 0.50 0.7 $110,000 200 50 Set up costs Lamps produced per patch Set up hour per patch I 3 Total Home size Industry size lamp lamp $10 $15 $16.00 $16.00 Direct materials per unit Direct manufacturing labor rate per unit Direct labor hours per unit 0.50 0.7 $110,000 200 50 1 3 Set up costs Lamps produced per patch Set up hour per patch Advertising costs Total indirect manufacturing costs Annual production $150,000 $260,000 10.000 2,000 Page Break
