Can you provide the solution for Fundamentals of Cost Accounting Chapter 9 Problem 57P?
Required matema producing squeaky toys. You have trends who work on the production and marketing or squeaky toys and you believe that they would lose their jobs if management dropped this line. bobinamos Should you show the activity-based costing results to management? VISA En 001 000 E 2 annoibuboglo odmor nobubong oun 9-57. Activity-Based Costing and Predetermined Overhead Allocation Rateso na19 (L0 93,50 Kitchen Supply, Inc. (KSI), manufactures three types of flatware: institutional standard, and silver. It applies all indirect costs according to a predetermined rate based on direct labor-hours. A consul- tant recently suggested that the company switch to an activity-based costing system and prepared the following cost estimates for year 2 for the recommended cost drivers. one excel Recommended Estimated Estimated Cost Activity Cost Driver Cost Driver Activity Processing orders Number of orders $ 54,000 200 orders Setting up production Number of production runs 216,000 100 runs Handling materials. Pounds of materials used 360,000 120,000 pounds Machine depreciation and maintenance Machine-hours 288,000 12,000 hours Performing quality control .. Number of inspections 72.000 45 inspections Packing Number of units 144.000 480,000 units Total estimated cost. $1,134.000 In addition, management estimated 7.500 direct labor hours for year 2. Assume that the following cost driver volumes occurred in January, year 2. Institutional Standard 60,000 24,000 $39,000 $24,000 4509 450 12 9 Silver 9,000 $15,000 600 Number of units produced Direct materials costs Direct labor-hours Number of orders.. Number of production runs Pounds of material Machine-hours Number of inspections Units shipped 3 15,000 580 3 60,000 6.000 140 3 24,000 6 6 3.000 80 3 9,000 a. Actual labor costs were SiS per hour Required SAM Compute a predetermined overhead rate for year 2 for each cost driver using the estimated costs and estimated cost driver units prepared by the consultant. Also compute a predeter- mined rate for year 2 using direct labor-hours as the allocation base. Wu h Compute the production costs for each product for January using direct labor-hours as the allocation base and the predetermined rate computed in requirement (ako Compute the production costs for each product for January using the cost drivers recom- mended by the consultant and the predetermined rates computed in requirement (a).(Note: Do not assume that total overhead applied to products in January will be the same for activity d Management has seen your numbers and wants in explanation for the discrepancy between the product costs using direct labor-hours as the allocation base and the product costs using activity based costing. Write a brief response to management based costing as it was for the laber-hour based allocation) valimised 10X
