Globe steel Furniture Ltd (GSFL) manufactures three types of steel tables Deluxe, Prince and King. The company has been experiencing steady declines in its profitability in recent times. GSFL Ltd currently uses conventional product costing system whereby overhead costs are allocated on the basis of direct labour hours. The direct labour hours are estimated to be 146,000 hours. The Direct material and Direct Labour costs per unit for the three products are as below: Deluxe Prince King Direct Material $360 $500 $600 Direct Labour $90 $120 $150 The management suspects that conventional product costing system used may have contributed to the profit declines. Therefore, the CFO implemented an alternative system namely, activity-based product costing system. Given below are each activity, its cost and its related activity driver. Cost Activity Material handling Activity Driver Weight of raw material $ 96,000 Machining $ 1,072,000 Machine hours $292,000 Direct Labour hours Assembly Total manufacturing cost $ 1,460,000 The following information pertains to each product line of GSFL Ltd for the year: Deluxe Prince King Units to be produced 10,000 4,000 20,000 Machine hours per unit 2 10 Weight (kg)of raw material per 1 3 0.5 1 3 0.5 Weight (kg)of raw material per unit Labour hours per unit 3 4 5 5 1) Calculate the predetermined overhead rate based on Direct labour hours (0.5 mark) Please only enter number do not use dollar sign or decimal point Predetermined Rate = 2) Calculate the cost per unit under conventional product costing system? (1.5 mark) Please only enter number do not use dollar sign or decimal point Deluxe Prince King 3)Determine the total overhead allocated to each of the three products (4.5 marks) Please only enter number do not use dollar sign or decimal point. Deluxe Prince King Material handling Machining Assembly 4) Determine the total cost per unit of producing each product if activity based costing were to be used (1.5 mark) Please only enter number do not use dollar sign where applicable, use one decimal point. Deluxe King 3)Determine the total overhead allocated to each of the three products (4.5 marks) Please only enter number do not use dollar sign or decimal point. Deluxe Prince King Material handling Machining Assembly 4) Determine the total cost per unit of producing each product if activity based costing were to be used (1.5 mark) Please only enter number do not use dollar sign where applicable, use one decimal point. Deluxe Prince King
