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Management & Cost Accounting The Jackson Company has always allocated all overhead costs to products based upon the number of units produced. Over the years

Management & Cost Accounting

The Jackson Company has always allocated all overhead costs to products based upon the number of units produced. Over the years overhead costs have grown enormously and the firms profits have been falling. During this same time the firm has substantially broadened the lines of products it produces.

During the past year overhead amounted to RMB1.65 million. A study reveals that RMB350,000 of this is primarily depreciation on buildings and equipment, heat, light, and similar common costs. The remaining RMB1,300,000 is primarily for salaries for people who manage the flow of production, production schedulers, expeditors, equipment setup workers, and others needed to modify production lines whenever a department switches from manufacturing one type of product to another.

The following historical records have been developed for these production expeditors.

OVERHEAD: RMB 1,650,000

DEPRECIATION: RMB 350,000

SALARIES: RMB 1,300,000

Year

Total Units Produced

Number of Product Lines

Number of Expeditors

ExpeditorsSalaries

2015

2,400,000

78

4

RMB184,000

2016

2,600,000

114

6

282,000

2017

2,750,000

165

9

436,500

2018

2,550,000

240

12

606,000

2019

2,700,000

360

18

927,000

2020

2,500,000

480

25

1,300,000

Last years production and the direct costs incurred for a small sample of the firms products are summarised below:

Product

J-275

R-895

T-28A

Y-477

Number of units

200,000

1,000

14,000

90,000

Material costs

RMB235,000

RMB590

RMB2,800

RMB50,000

Labour Costs

RMB65,000

RMB80

RMB1,100

RMB10,000

**Required Answer all the questions in detail (a,b)

a. Develop the cost of each product in the sample using the firms current (2020) Allocation Base.

(Please attach your calculation details)

b. Develop two allocation bases, one spreading common costs over units produced and a second spreading production expediting costs over product lines. Determine the cost of each product in the sample using these two new rates.

(Please attach your calculation details)

Reply to the expert: Dear expert, I don't know what is "Preferably please make it tabulated" referring to as the questions already tabulated.

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