Question 12 Answer saved Marked out of 7.69 Flag question Activity-Based Costing Slack Corporation has the following predicted indirect costs and cost drivers for 2016 for the given activity cost pools: Fabrication Department Finishing Department Cost Driver Maintenance $71,000 $61,000 Machine hours Materials handling 30,000 15,000 Material moves Machine setups 70,000 5,000 Machine setups Inspections 25,000 Inspection hours $171,000 $106,000 The following activity predictions were also made for the year: Fabrication Department Finishing Department Machine hours 10,000 5,000 Material moves 3,000 1,500 Machine setups 700 50 Inspection hours 1,000 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Slack's president, Charles Slack, is trying to evaluate the company's product mix strategy regarding two of its five product models, ZX300 and SL500. The company has been using a company-wide overhead rate based on machine hours but is considering switching to either department rates or activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models: Direct materials cost Direct labor cost Machine hours (Fabrication) Machine hours (Finishing) Materials moves Machine setups ZX300 SL500 $11,000 $17,000 $5,000 $4,000 500 700 200 30 50 5 9 100 Inspection hours 30 60 a. Determine the cost of one unit each of ZX300 and SL500, assuming a company-wide overhead rate is used based on total machine hours. Round rate to two decimal places. Overhead rate based on total machine hours per machine hour Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places. SL500 Product Costs per Unit ZX300 Direct materials $ 11000 $ Direct labor Manufacturing overhead: Total cost per batch $ $ Number of units per batch Cost per unit $ $ b. Determine the cost of one unit of ZX300 and SL500, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments. Round rate to two decimal places, if applicable. Overhead rate based on machine hours for Fabrication Dept. $ per machine hour Overhead rate based on machine hours for Finishing Dept. $ per machine hour Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit Product Costs per Unit ZX300 SL500 Direct materials $ $ Direct lahor Manufacturing overhead: Fabrication Dept. Finishing Dept. Total cost per batch Number of units per batch Cost per unit $ $ $ $ c. Determine the cost of one unit of ZX300 and SL500, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities. Round rate to two decimal places, if applicable. $ Activity-based overhead rates: Maintenance Materials handling Machine setup Inspection activities $ $ $ Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit ZX300 SL500 $ $ Direct materials Direct labor Manufacturing overhead: Maintenance activity Materials handling activity Machine setups activity Inspections activity Total cost per batch Number of units per batch Cost per unit $ $ $ $
