Plantwide versus Departmental Rates, Product-Costing Accuracy: Activity-Based Costing

Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A's production is much more labor-intensive than that of Model B. Model B is also the more popular of the two speakers. The following data has been gathered for the two products:

please show the equation/calculation

Plantwide versus Departmental Rates, Product-Costing Accuracy: Activity-Based Costing Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A's production is much more labor-intensive than that of Model B. Model B is also the more popular of the two speakers. The following data has been gathered for the two products: Product Data Model A Model B Units produced per year 10,000 100,000 Prime costs $145,000 $1,450,000 Direct labor hours 138,000 290,000 Machine hours 23,000 196,000 Production runs 30 70 Inspection hours 800 1,400 Maintenance hours 8,000 92,000 Overhead costs: Setup costs $300,000 Inspection costs 209,000 Machining 47,000 Maintenance 300,000 Total $856,000 1. Compute the overhead cost per unit for each product by using a plantwide rate based on direct labor hours. (Round to two decimal places.) Plantwide rate: $ 2 per DLH. Model A: $ 27.6 overhead cost per unit Model B: 5.8 V overhead cost per unit Feedback Check My Work Divide total overhead costs by total direct labor hours. Multiply overhead rate by hours for each model, and then divide by units produced. 2. Compute the overhead cost per unit for each product by using ABC. (Round rates and unit overhead costs to two decimal places.) Model A: $ overhead cost per unit Model B: overhead cost per unit Note: Be sure to complete both tables below. Activity Driver Activity Rate Setups $ per Inspections $ per Machining $ per Maintenance $ per Overhead assignment Model A Model B Setups $ Inspections Machining Maintenance 1 Total overhead $ Units produced Overhead per unit 3. Suppose that Ramsey decides to use departmental overhead rates. There are two departments: Department 1: (machine intensive) with a rate of $3 per machine hour and Department 2: (labor intensive) with a rate of $1 per direct labor hour. The consumption of these two drivers is as follows: Department 1 Department 2 Machine Hours Direct Labor Hours Model A 9,000 135,000 Model B 190,000 260,000 Compute the overhead cost per unit for each product by using departmental rates. (Round to two decimal places.) Model A: per unit Model B: $ per unit