Duta Revive Vw Hele TO VIEW Uyou need to edit antecede o P v 41. Activity Based Costing Vurus Traditional Approach. Activity Based Management contined) Estimated Overhead Cot Activity Perchase orders Machine Con Dior archase orders be ) Estimated Cost Driver Activity orden (a) - Predetermined Orbead Predetermined Rate QYTE 5800 per ord Connect Inice per hour perpection incontest hos inspeet Nobelpection Total () Ovocado Ohead Overhead Det Table Table Preded Oba Rate Cust Die Activity Cost Thi Overhead Alated Ach Purces Owees Alle 5 0 000 Carret per perspectie Tuu 5.000.000 S10 Activity-Based Costing Versus Traditional Approach, Activity-Based Management. Fine Finishing, Inc. produces a wood desk that sells for $500 and a wood table that sells for $900 Last year total overhead costs of $6,000,000 were allocated based on direct labor costs. Direct labor costs totaled $2,000,000 last year, and the company produced 15,000 desks and 5,000 tables Total direct labor and direct materials costs by product for last year were as follows: Desk Table Direct materials $1,575,000 $950,000 $1,200,000 $800,000 The management of Fine Finishing, Inc. would like to use activity-based costing to allocate overhead rather than one plantwide rate based on direct labor costs. The following estimates are for the activities and related cost drivers identified as having the greatest impact on overhead Direct labor costs Estimated Cost Driver Activity Estimated Overhead Costs Activity Cost Driver Desk Table Total Purchase orders Number of purchase orders $ 300,000 900 100 7.000 Machine setups Number of setups 1.600,000 240 280 500 Machine maintenance Machine hours 2,400,000 42.000 18.000 30.000 Quality inspections Number of inspections 1.200,000 15.000 5,000 20,000 Total 8,000,000 Required: a Calculate the direct materials cost per unit and direct labor cost per unit for each product b 1. Using the plantwider allocation method, calculate the wredetermined votimidate and determine the overhead cost per unit located to the desk and table products 2. Using the planitide allocation method calculate the product cost per unit for the desk and Total 8,000,000 Required: a Calculate the direct materials cost per unit and direct labor cost per unit for each product. b 1 Using the plantwide allocation method, calculate the predetermined overhead rate and determine the overhead cost per unit allocated to the desk and table products. 2. Using the plantwide allocation method, calculate the product cost per unit for the desk and table products Using the activity based costing allocation method, calculate the predetermined overhead rate for each activity (Hint step 1 through step 3 in the activity-based casting process have already been done for you this is step 4.) 2. Using the activity-based costing allocation method allocate overhead to each product (Hint. This is step 5 in the activity-based costing process. Determine the overhead cost per unit Round results to the nearest dollar 3 What is the product cost per unit for the desk and table products? d Calculate the per unit protit for each product using the plantwide approach and the activity based costing approach How much did the per unit profit change when moving from one approach to the other? Refer to the estimated cost driver activity provided Calculate the percent of each activity consumed by each product (for example, the desk product issued 100 of the 1000 purchase orders sued in total and therefore consumes 90 percent of this activity. These percentages represent the amount of the costs allocated to each producing activity based costing Using the plantwide approach 60 percent of all overhead costs are allocated to the desk and 40 percent to the table Compare the activity based costing percentages to the percentage of overhead allocated to each product using the plantideproach Use the information to explain what the shift in overhead costs to the desk product activity-based costing Calculating and Recording Overhead Applied. Assume Fine Fing, Inc. discussed Problem 41. res activity based costing Required ung the data presented at the beginning of Protem 4 cate the pretend ved for each Duta Revive Vw Hele TO VIEW Uyou need to edit antecede o P v 41. Activity Based Costing Vurus Traditional Approach. Activity Based Management contined) Estimated Overhead Cot Activity Perchase orders Machine Con Dior archase orders be ) Estimated Cost Driver Activity orden (a) - Predetermined Orbead Predetermined Rate QYTE 5800 per ord Connect Inice per hour perpection incontest hos inspeet Nobelpection Total () Ovocado Ohead Overhead Det Table Table Preded Oba Rate Cust Die Activity Cost Thi Overhead Alated Ach Purces Owees Alle 5 0 000 Carret per perspectie Tuu 5.000.000 S10 Activity-Based Costing Versus Traditional Approach, Activity-Based Management. Fine Finishing, Inc. produces a wood desk that sells for $500 and a wood table that sells for $900 Last year total overhead costs of $6,000,000 were allocated based on direct labor costs. Direct labor costs totaled $2,000,000 last year, and the company produced 15,000 desks and 5,000 tables Total direct labor and direct materials costs by product for last year were as follows: Desk Table Direct materials $1,575,000 $950,000 $1,200,000 $800,000 The management of Fine Finishing, Inc. would like to use activity-based costing to allocate overhead rather than one plantwide rate based on direct labor costs. The following estimates are for the activities and related cost drivers identified as having the greatest impact on overhead Direct labor costs Estimated Cost Driver Activity Estimated Overhead Costs Activity Cost Driver Desk Table Total Purchase orders Number of purchase orders $ 300,000 900 100 7.000 Machine setups Number of setups 1.600,000 240 280 500 Machine maintenance Machine hours 2,400,000 42.000 18.000 30.000 Quality inspections Number of inspections 1.200,000 15.000 5,000 20,000 Total 8,000,000 Required: a Calculate the direct materials cost per unit and direct labor cost per unit for each product b 1. Using the plantwider allocation method, calculate the wredetermined votimidate and determine the overhead cost per unit located to the desk and table products 2. Using the planitide allocation method calculate the product cost per unit for the desk and Total 8,000,000 Required: a Calculate the direct materials cost per unit and direct labor cost per unit for each product. b 1 Using the plantwide allocation method, calculate the predetermined overhead rate and determine the overhead cost per unit allocated to the desk and table products. 2. Using the plantwide allocation method, calculate the product cost per unit for the desk and table products Using the activity based costing allocation method, calculate the predetermined overhead rate for each activity (Hint step 1 through step 3 in the activity-based casting process have already been done for you this is step 4.) 2. Using the activity-based costing allocation method allocate overhead to each product (Hint. This is step 5 in the activity-based costing process. Determine the overhead cost per unit Round results to the nearest dollar 3 What is the product cost per unit for the desk and table products? d Calculate the per unit protit for each product using the plantwide approach and the activity based costing approach How much did the per unit profit change when moving from one approach to the other? Refer to the estimated cost driver activity provided Calculate the percent of each activity consumed by each product (for example, the desk product issued 100 of the 1000 purchase orders sued in total and therefore consumes 90 percent of this activity. These percentages represent the amount of the costs allocated to each producing activity based costing Using the plantwide approach 60 percent of all overhead costs are allocated to the desk and 40 percent to the table Compare the activity based costing percentages to the percentage of overhead allocated to each product using the plantideproach Use the information to explain what the shift in overhead costs to the desk product activity-based costing Calculating and Recording Overhead Applied. Assume Fine Fing, Inc. discussed Problem 41. res activity based costing Required ung the data presented at the beginning of Protem 4 cate the pretend ved for each