Question
MBACompanyproducestwoproducts,X andY.Theindirect laborcostsinclude thefollowing two items: Plantsupervision $ 700,000 Setuplabor(indirect) 300,000 Totalindirect labor $1,000,000 Thefollowingactivity-baseusageandunitproductioninformationisavailableforthetwo products: Numberof Setups Direct Labor Hours Units ProductX 200 20,000
MBACompanyproducestwoproducts,X andY.Theindirect laborcostsinclude thefollowing two items:
Plantsupervision | $ 700,000 |
Setuplabor(indirect) | 300,000 |
Totalindirect labor | $1,000,000 |
Thefollowingactivity-baseusageandunitproductioninformationisavailableforthetwo products:
| Numberof Setups | Direct Labor Hours | Units | |
ProductX | 200 | 20,000 | 900 |
ProductY | 200 | 30,000 | 1,100 |
Total | 400 | 50,000 | 2,000 |
Requirements:(2pts.each)
(a) | DeterminethefactoryoverheadcostperunitforProductsXandY,usingthe single plantwidefactoryoverheadrate. |
(b) | DeterminethefactoryoverheadcostperunitforProductsXandY,usingactivity-based costingassumingthattheactivitybasefor supervisionisdirectlaborhoursandthe activity base for setup labor is number of setups. |
(c) | Whyisthefactoryoverhead cost perunitdifferent forthetwo productsunder thetwo methods? |
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Advanced Financial Accounting An IFRS Standards Approach
Authors: Pearl Tan, Chu Yeong Lim, Ee Wen Kuah
4th Edition
9789814821278, 9814821276
