Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

please do not copy other solutions on chegg the values are different Question 3: Tas Machinery manufactures two products, basic and superior, and applies overhead

image text in transcribed

please do not copy other solutions on chegg the values are different

Question 3: Tas Machinery manufactures two products, basic and superior, and applies overhead on the basis of direct labour hours. Anticipated overhead and direct labour time for the upcoming accounting period are $960 000 and 25 000 hours, respectively. Information about the company's products follows: Estimated product volume Direct material cost Direct labour per unit Basic 3 000 units $25 per unit 3 hours at $12 per hour Superior 4000 units $40 per unit 4 hours at $12 per hour Tas Machinery's overhead of $960 000 can be identified with three major activities: order processing ($180 000), machine processing ($672 000) and product inspection ($108 000). These activities are driven by number of orders processed, machine hours worked and inspection hours, respectively. Data relevant to these activities follow: 220 8800 11000 Order Processed Machine hours Inspection hours Worked Basic 330 19800 2200 Superior 24200 Total 550 44000 Top management is very concerned about declining profitability despite a healthy increase in sales volume. The decrease in profit is especially puzzling because the company recently undertook a massive plant renovation during which new, highly automated machinery was installedmachinery that was expected to produce significant operating efficiencies. Required 1. Assuming use of direct labour hours to apply overhead to production, calculate the unit manufacturing costs of the basic and superior products if the expected manufacturing volume is attained. 151 2. Assuming use of activity-based costing, calculate the unit manufacturing costs of the basic and superior if the expected manufacturing volume is attained. [10] [Total Marks: 5+10=15]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions