Munoz Electronics produces video games in three market categories commercial, home, and miniature Munoz 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 Total Pooled Cost Types of Costs Cost Driver Unit $ 792,000 Indirect labor wages, supplies, factory utilities, machine maintenance Machine hours Batch 412,800 Materials handling, inventory storage, labor for setups,packaging, labeling and shipping, scheduling Number of production orders Product 211,100 Research and development Time spent by research department Facility 493,000 Rent, general utilities, maintenance, facility depreciation, admin salaries Square footage Additional data for each of the product lines follow Commercial Home Miniature Total Direct materials cost $ 35 10 unit $ 23 40 unit $ 31 00 unit Direct labor cost $ 14 50 hour $ 14 50 hour $ 17 40 hour Number of labor hours 5,300 11,400 2,200 18,900 Number of machine hours 11,000 46,000 33,000 90,000 Number of production orders 220 1,900 680 2,800 Research and development time 11 18 71 100 Number of units 18,000 44,000 17,000 79,000 Square footage 19,000 54,000 12,000 85,000 Required 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 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 Type of Product Total Cost Cost per Unit a Commercial $ $ Home Miniature Combined total $ 4,635,200 b Commercial Home Miniature Combined total $ 0

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 26, 2024

Munoz Electronics produces video games in three market categories: commercial, home, and miniature. Munoz has traditionally allocated overhead costs to the three products using the

Munoz Electronics produces video games in three market categories: commercial, home, and miniature. Munoz 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	Total Pooled Cost		Types of Costs	Cost Driver
Unit	$	792,000	Indirect labor wages, supplies, factory utilities, machine maintenance	Machine hours
Batch		412,800	Materials handling, inventory storage, labor for setups,packaging, labeling and shipping, scheduling	Number of production orders
Product		211,100	Research and development	Time spent by research department
Facility		493,000	Rent, general utilities, maintenance, facility depreciation, admin. salaries	Square footage

Additional data for each of the product lines follow:

	Commercial			Home			Miniature			Total
Direct materials cost	$	35.10	/unit	$	23.40	/unit	$	31.00	/unit
Direct labor cost	$	14.50	/hour	$	14.50	/hour	$	17.40	/hour
Number of labor hours		5,300			11,400			2,200			18,900
Number of machine hours		11,000			46,000			33,000			90,000
Number of production orders		220			1,900			680			2,800
Research and development time		11	%		18	%		71	%		100	%
Number of units		18,000			44,000			17,000			79,000
Square footage		19,000			54,000			12,000			85,000

Required

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.

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.