Question
Product-Costing Accuracy, Consumption Ratios Plata Company produces two products: a mostly handcrafted soft leather briefcase sold under the label Maletin Elegant and a leather briefcase
Product-Costing Accuracy, Consumption Ratios
Plata Company produces two products: a mostly handcrafted soft leather briefcase sold under the label Maletin Elegant and a leather briefcase produced largely through automation and sold under the label Maletin Fina. The two products use two overhead activities, with the following costs:
Setting up equipment | $ 4,000 |
Machining | 18,000 |
The controller has collected the expected annual prime costs for each briefcase, the machine hours, the setup hours, and the expected production.
Elegant | Fina | |
Direct labor | $9,000 | $3,000 |
Direct materials | $3,000 | $3,000 |
Units | 3,000 | 3,000 |
Machine hours | 500 | 4,500 |
Setup hours | 100 | 100 |
Required:
1. Conceptual Connection: Do you think that the direct labor costs and direct materials costs are accurately traced to each briefcase? Explain.
2. Calculate the consumption ratios for each activity. Round your answers to one decimal place.
Elegant | Fina | |
Machining | fill in the blank 2 | fill in the blank 3 |
Setups | fill in the blank 4 | fill in the blank 5 |
3a. Calculate the overhead cost per unit for each briefcase by using a plantwide rate based on direct labor costs. Round to the nearest cent. (Note: Do not round intermediate calculations.)
Elegant | $fill in the blank 6 per briefcase |
Fina | $fill in the blank 7 per briefcase |
3b. Based on your calculations above which of the following statements is correct?
4. Conceptual Connection: Calculate the overhead cost per unit for each briefcase by using overhead rates based on machine hours and setup hours. Round your answers to the nearest cent.
Elegant | $fill in the blank 9 per unit |
Fina | $fill in the blank 10 per unit |
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