Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ellix Company manufactures two models of ultra-high fidelity speakersthe X200 model and the X99 model. Data regarding the two products follow: Product Direct Labor-Hours Annual

Ellix Company manufactures two models of ultra-high fidelity speakersthe X200 model and the X99 model. Data regarding the two products follow:

Product Direct Labor-Hours Annual Production Total Direct Labor-Hours
X200 0.3 DLHs per unit 17,000 units 5,100 DLHs
X99 0.5 DLHs per unit 42,000 units 21,000 DLHs
26,100 DLHs

Additional information about the company follows:

Model X200 requires $32 in direct materials per unit, and model X99 requires $35.

The direct labor workers are paid $40 per hour.

The company has always used direct labor-hours as the allocation base for applying manufacturing overhead cost to products.

Model X200 is more complex to manufacture than model X99 and requires the use of special equipment.

Because of the special work required in (d) above, the company is considering the use of activity-based absorption costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows:

Estimated Total Activity
Activity Cost Pool Activity Measure Estimated Total Cost X200 X99 Total
Machine setups Number of setups $ 201,000 120 180 300
Special processing Machine-hours 290,000 1,000 0 1,000
General factory Direct labor-hours 783,000 5,100 21,000 26,100
$ 1,274,000

Required:

1. Assume that the company continues to use direct labor-hours as the allocation base for applying overhead cost to products.

a. Compute the plantwide predetermined overhead rate.

b. Compute the unit product cost of each model.

2. Assume that the company decides to use activity-based absorption costing to apply overhead cost to products.

a. Compute the activity rate for each activity cost pool and determine the amount of overhead cost that would be applied to each model using the activity-based approach.

b. Compute the unit product cost of each model.

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

Word Search Puzzle Book For Auditing Clerk

Authors: Lx Antu

1st Edition

B09KN7YDD6, 979-8757688466

More Books

Students also viewed these Accounting questions

Question

What are vulnerabilities? How do you identify them?

Answered: 1 week ago

Question

1. In what ways has flexible working revolutionised employment?

Answered: 1 week ago