Question
Product-Costing Accuracy, Plantwide and Departmental Rates, ABC Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The
Product-Costing Accuracy, Plantwide and Departmental Rates, ABC
Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products:
Product-Related Data | ||
Scientific | Business | |
Units produced per year | 72,000 | 720,000 |
Prime costs | $250,000 | $2,500,000 |
Direct labor hours | 98,000 | 980,000 |
Machine hours | 50,400 | 504,000 |
Production runs | 100 | 150 |
Inspection hours | 2,000 | 3,000 |
Maintenance hours | 2,250 | 9,000 |
Department Data | ||
Department 1 | Department 2 | |
Direct labor hours: | ||
Scientific calculator | 73,800 | 24,200 |
Business calculator | 137,200 | 842,800 |
Total | 211,000 | 867,000 |
Machine hours: | ||
Scientific calculator | 26,800 | 23,600 |
Business calculator | 423,440 | 80,560 |
Total | 450,240 | 104,160 |
Overhead costs: | ||
Setup costs | $214,500 | $214,500 |
Inspection costs | 150,000 | 150,000 |
Power | 253,000 | 141,000 |
Maintenance | 196,000 | 276,500 |
Total | $813,500 | $782,000 |
Required:
1. Compute the overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours. Round your calculations and answers to the nearest cent.
Plantwide rate | $ per direct labor hour |
Overhead cost per unit: | |
Scientific | $ per unit |
Business | $ per unit |
2. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for Department 1 and direct labor hours for Department 2. Round departmental rates and the overhead cost per unit to the nearest cent if rounding is required.
Departmental rates: | |
Department 1 | $ per machine hour |
Department 2 | $ per direct labor hour |
Overhead cost per unit: | |
Scientific | $ per unit |
Business | $ per unit |
Repeat using direct labor hours for Department 1 and machine hours for Department 2. Round departmental rates and the overhead cost per unit to the nearest cent if rounding is required.
Departmental rates: | |
Department 1 | $ per direct labor hour |
Department 2 | $ per machine hour |
Overhead cost per unit: | |
Scientific | $ per unit |
Business | $ per unit |
3. Compute the overhead cost per unit for each product using activity-based costing. Round your calculations and answers to the nearest cent.
Overhead Cost | |
Scientific | $ per unit |
Business | $ per unit |
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