Q1 2
Finch Electronics produces video games in three market categories: commercial, home, and miniature. Finch 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 Unit Total Pooled Cost $ 626,400 Batch 581,200 Types of costs Cost Driver Indirect labor wages, supplies, factory utilities, machine Machine hours maintenance Materials handling, inventory storage, labor for Number of production orders setups, packaging, labeling and shipping, scheduling Research and development Time spent by research department Rent, general utilities, maintenance, facility depreciation, Square footage admin. salaries Product Facility 211,600 520,800 Additional data for each of the product lines follow: Total Miniature $ 30.80/unit $ 19. 10/hour 2,000 Direct materials cost Direct labor cost Number of labor hours Number of machine hours Number of production orders Research and development time Number of units Square footage Commercial $ 35. 20/unit $ 14.30/hour 6,500 12,000 240 13% 13,000 21,000 Home $ 23.70/unit $ 14.30/hour 11,500 45,000 1,800 16% 44,000 52,000 15,000 860 71% 12,000 20,000 20,000 72,000 2,900 100% 69,000 93,000 Required a. 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. b. 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. a. 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. b. 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. (For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount.) Total Cost Cost per Unit Type of Product Commercial Home Miniature Combined total b. Commercial Home Miniature Combined total $ 0 $ 0
