Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you show me how to do question C? As you learned in the previous chapters, Current Designs has two main product linescomposite kayaks, which

Can you show me how to do question C?

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
As you learned in the previous chapters, Current Designs has two main product linescomposite kayaks, which are handmade and very labour-intensive, and rotomoulded kayaks, which require less labour but use more expensive equipment. Current Designs' controller, Maria Miller. is now evaluating several methods of assigning overhead to these products. It is important to ensure that costs are appropriately assigned to the company's products. At the same time, the system that is used must not be so complex that its costs are greater than its benets. Maria has decided to use the followingactivities and costs to evaluate the methods of assigningoverhead- Activity Cost Designing new models $ 128,000 Creating and testing prototypes 160,000 Creating moulds for kayaks 132,000 Operating the oven for the rotomoulded kayaks 42,000 Operating the vacuum line for the composite kayaks 26,000 Supervising production employees 134,000 Curing (the time that is needed for the chemical processes to nish before the next step in the production process; many of these costs are related to the space required in the building} 160,000 Total $832,000 As Maria examines the data, she decides that the cost of operating the oven for the rotomoulded kayaks and the cost ofoperatingthe vacuum line for the composite kayaks can be directly assigned to each of these product lines and do not need to be allocated with the other costs. For purposes of this analysis, assume that Current Designs uses $223,000 in direct labour costs to produce 1,000 composite kayaks and $285,750 in direct labour costs to produce 4,000 rotomoulded kayaks each year. {a} V Your answer is correct. One method of allocating overhead would assign the common costs to each product line by using an allocation basis such as the number of employees working on each type of kayak or the amount of factory space used for the production of each type of kayak. Maria knows that about 50% of the area of the plant and 50% of the employees relate to the composite kayaks, and the remaining space and other employees are used for the rotomoulded kayaks. Using this information. and remembering that the costs of operating the oven and the yacuu m lines have been directly assigned, determine the total amount to be assigned to the composite kayak line and the rotomoulded kayak line, and the amount to be assigned to of the uniE in each line. [Raundcostasskned permit to 2 decimal places, es. 125.25.) Composite Rotomaulded Total cost assigned $ 433000 $ 449000 Cost assigned per unit $ 433 $ 11225 eTextbook and Media Attempts: 1 of 3 used Using multiple attempts will impact you rscore. 10% score reduction after attempt 2 ( b). Your answer is correct. Another method of allocating overhead is to use direct labour dollars as an allocation basis. Remembering that the costs of operating the oven and the vacuum line have been assigned directly to the product lines, assign the remaining costs using direct labour dollars as the allocation basis. Then, determine the amount of overhead that should be assigned to each of the units in each line. (Round cost assigned per unit to 2 decimal places, e.g. 125.25.) Composite Rotomoulded Total cost assigned $ 382800 499200 Cost assigned per unit $ 382.80 124.80 eTextbook and Media Attempts: 2 of 3 used Using multiple attempts will impact your score. 10% score reduction after attempt 2Isl. Activity-based costing requires a cost driver for each cost pool. Use the fol lowing information to assign the costs to the product lines using the activity-based costing approach. Driver Amount Driver Amount for Composite for Rotomoulded Activity Cost Driver Kayaks Kayaks Designing new models Number of models 3 1 Creating and testing prototypes Number of prototypes 6 2 Creating moulds for kayaks Number of moulds 13 1 Supervising production employees Number of employees 1 1 12 Curing Number of days of cu ring time 14,000 2,000 What amount of overhead should be assigned to each composite kayak using this method? What amount of overhead should be assigned to each rotomoulded kayak using this method? {Round castnssignedper unit to 2 decimai places, as. 125.25.]| Composite Rotomoulded Total cost assign ed $ 35 Cost assigned per unit $ $ eTextbook and Media

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 Principles Managerial Concepts

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow

7th Canadian Edition

1119310296, 978-1119310297

More Books

Students also viewed these Accounting questions

Question

2. What we can learn from the past

Answered: 1 week ago

Question

2. Develop a good and lasting relationship

Answered: 1 week ago