Harwell, Inc. uses a traditional volume-based costing system in which direct labor hours are allocation base.
Saved Help Save & Exit Harwell, Inc. uses a traditional volume based costing system in which direct labor hours are the allocation base. Harwell produces two different products Product A, which uses 80.000 direct labor hours and Product B, which uses 26,000 direct labor hours. Harwell is considering switching to an ABC system by splitting its manufacturing overhead cost of $825.000 across three activities: Setup Production, and Finishing. Under the traditional volume-based costing system, the predetermined overhead rate is $8.25/direct labor hour. Under the ABC system, the cost of each activity and proportion of the activity drivers used by each product are as follows Proportion used by Product B Total Cost $ 67,000 337.000 Proportion used by Product A 301 40% 203 Design (Engineering Hours) Production (Direct Labor Hours) Inspection (Batches) Required: a. Calculate the indirect manufacturing costs assigned to Product A under the traditional costing system Indirect Manufacturing Costs to Product Bunder the traditional costing system b. Calculate the indirect manufacturing costs as 1 of 4 Next > ennect.mheducation.com/flow/connect.html Sved Saved Required: a. Calculate the indirect manufacturing costs assigned to Product A under the traditional costing system Indirect Manufacturing Costs RSS REFERERERER b. Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system Indirect Manufacturing Costs c. Calculate the indirect manufacturing costs assigned to Product A under the ABC system, Indirect Manufacturing Costs Saved d. Calculate the indirect manufacturing costs assigned to Product B under the ABC system. Indirect Manufacturing Costs e. Which product is under-costed and which is over-costed under the volume-based cost system compared to ABC? Product A Product B Saved Help Save & Exit Harwell, Inc. uses a traditional volume based costing system in which direct labor hours are the allocation base. Harwell produces two different products Product A, which uses 80.000 direct labor hours and Product B, which uses 26,000 direct labor hours. Harwell is considering switching to an ABC system by splitting its manufacturing overhead cost of $825.000 across three activities: Setup Production, and Finishing. Under the traditional volume-based costing system, the predetermined overhead rate is $8.25/direct labor hour. Under the ABC system, the cost of each activity and proportion of the activity drivers used by each product are as follows Proportion used by Product B Total Cost $ 67,000 337.000 Proportion used by Product A 301 40% 203 Design (Engineering Hours) Production (Direct Labor Hours) Inspection (Batches) Required: a. Calculate the indirect manufacturing costs assigned to Product A under the traditional costing system Indirect Manufacturing Costs to Product Bunder the traditional costing system b. Calculate the indirect manufacturing costs as 1 of 4 Next > ennect.mheducation.com/flow/connect.html Sved Saved Required: a. Calculate the indirect manufacturing costs assigned to Product A under the traditional costing system Indirect Manufacturing Costs RSS REFERERERER b. Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system Indirect Manufacturing Costs c. Calculate the indirect manufacturing costs assigned to Product A under the ABC system, Indirect Manufacturing Costs Saved d. Calculate the indirect manufacturing costs assigned to Product B under the ABC system. Indirect Manufacturing Costs e. Which product is under-costed and which is over-costed under the volume-based cost system compared to ABC? Product A Product B
