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Jordan Electronics produces video games in three market categories: commercial, home, and miniature. Jordan has traditionally allocated overhead costs to the three products using the
Jordan Electronics produces video games in three market categories: commercial, home, and miniature. Jordan 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: Category Unit Total Pooled Cost $ 729,000 Cost Driver Machine hours Batch 626,200 Number of production orders Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Rent, general utilities, maintenance, facility depreciation, admin. salaries Product Facility 211,400 552,000 Time spent by research department Square footage Additional data for each of the product lines follow: Total Direct materials cost Direct labor cost Number of labor hours Number of machine hours Number of production orders Research and development time Number of units Square footage Commercial $ 35.80/unit $ 13.50/hour 6,500 17,000 240 15% 18,000 16,000 Home $ 23.50/unit $13.50/hour 12,900 50,000 2,100 19% 48,000 54,000 Miniature $ 29.60/unit $ 18.40/hour 2,000 14,000 860 66% 17,000 22,000 21,400 81,000 3,200 100% 83,000 92,000 Required Required 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 for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount.) Cost per Unit Type of Product Commercial a. $ Total Cost 1,517,400 3,080,100 Home $ $ 4,597,500 1,517,400 Miniature Combined total Commercial Home Miniature Combined total $ 1,517,400
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