Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

HealthTech Incorporated manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials

HealthTech Incorporated manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning four manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $29 per hour and that there were no beginning inventories. The following information was available for 2022, based on an expected production level of 422,222 units for the year:

Activity Cost Driver Budgeted Costs for 2022 Cost Driver Used as Allocation Base Cost Allocation Rate
Materials handling $ 5,900,000 Number of parts used $ 1.25 per part
Milling and grinding 9,000,000 Number of machine hours 13.00 per hour
Assembly and inspection 5,800,000 Direct labor hours worked 5.25 per hour
Testing 1,900,000 Number of units tested 4.50 per unit

The following production, costs, and activities occurred during the month of April:

Units Produced/Tested Direct Materials Costs Number of Parts Used Machine Hours Direct Labor Hours
54,000 $ 3,700,000 290,000 96,000 155,000

Required:

Calculate the total manufacturing costs and the cost per unit produced and tested during the month of April for HealthTech.

Note: Round "Cost per unit" to 2 decimal places.

Which of the following are the advantages of the ABC approach relative to using a single predetermined overhead application rate based on direct labor hours. (Note: You do not have to calculate the overhead that would be applied for the month of April using this alternative method.)

Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.

check all that apply

ABC does not help in decision-making.

ABC systems produce more accurate financial information.

ABC approach is likely to provide better information to manufacturing managers.

ABC helps in decision-making.

ABC systems produce more accurate product costing information.

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

Audit Management And Supervision Wiley Ronald Institute Of Internal Auditors Professional Book Series

Authors: Gil W. Courtemanch, Guilbert W. Courtemanche

1st Edition

0471625655, 978-0471625650

More Books

Students also viewed these Accounting questions

Question

List all physical disk partitions and mount points.

Answered: 1 week ago