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Green Furniture (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for
Green Furniture (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and labour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour-hours as the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the system by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Usage Activity Cost Pool Activity Base Activity Rate Desks Cabinets Parts receipts Number of parts $ 2.00 per part 2, 200 parts 1, 550 parts Machining Machine-hours $10.00 per machine-hour 225 machine-hours 330 machine-hours Assembly Units produced $ 1.60 per unit 1, 100 units 1, 550 units Quality control Units tested $ 3.00 per unit 110 units 1, 450 units Direct materials $ 5,500 $ 3, 100 Direct labour $13, 200 613, 200 Each product consumed 660 direct labour-hours. Required: 1. Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based costing to allocate overhead costs. (Round "Cost per unit" answers to 2 decimal places.) Dusters Cabinets Total manufacturing cost 29,530 Cost per unit $ 19.05 2. Redo the above using direct labour-hours as the allocation base. (Round "Cost per unit" answers to 2 decimal places.) Mops Dusters Total manufacturing cost Cost per unit 3. This part of the question is not part of your Connect assignment. 4. This part of the question is not part of your Connect assignment
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