Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Fenway Electronics produces video games in three market categories: commercial, home, and miniature. Fenway has traditionally allocated overhead costs to the three products using
Fenway Electronics produces video games in three market categories: commercial, home, and miniature. Fenway has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Total Pooled bed Category Unit Book Print rences Batch Product Facility Cost Types of Costs $360,000 Indirect labor wages, supplies, factory utilities, 194,400 105,600 machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development 300,000 Rent, general utilities, maintenance, facility depreciation, administrative salaries Additional data for each of the product lines follow: Machine hours Cost Driver Number of production orders Tine spent by research department Square footage Commercial Direct materials cost Direct labor cost $ 25.00/unit $ 15.00/unit Miniature $12.00/unit Total Number of labor hours Number of machine hours $ 10.00/hour 6,000 10,000 $ 8.00/hour 12,000 $ 9.00/hour 45,000 2,000 25,000 20,000 80,000 Number of production orders 200 2,000 800 3,000 Research and development time 10% 201 70% 100% Number of units Square footage Required 15,000 20,000 45,000 50,000 14,000 30,000 74,000 100,000 a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. (For all requirements, round intermediate calculations and "Cost per Unit" to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started