Refer to the data given in Problem 1. The company has implemented an activity-based costing system for its manufacturing overhead costs with the activity cost pools and activity driver data below. ASSESSENT BRIEFS I MANAGEMENT ACCOUNTNG T3 2022 me8 Southern Cross plans to produce 1000 units of each model of fax machine Required: 1. For each activity, calculate the cost per unit of activity driver (e.g. the cost per setup) 2. Determine, under activity-based costing, the total overhead to be assigned to each product line. 3. Calculate, under activity-based costing, the overhead assigned per unit of each type of face machine. 4. Prepare a table comparing the total product cost assigned to each type of fax machine using a plantwide overhead rate, department overhead rates and activity-based costing. (This requirement relies on the solution to Problem 1) Southern Cross Telecommunications Ltd manufactures two different fax machines for the business market. Cost estimates for the two models for the current year are as follows: Each model of fax machine requires 20 hours of direct labour. The basic system requires 5 hours in Department A and 15 hours in Department B. The advanced system requires 15 hours in Department A and 5 hours in Department B. The budgeted overhead costs in these two production departments are as follows: The firm's management expects to operate at a level of 20000 direct labour hours in each production department during the current year. Required: 1. Show how the company's predetermined overhead rate was determined. 2. If the firm prices each model of fax machine at 10 per cent over its cost, what will be the price of each model? 3. Suppose the company were to use predetermined departmental overhead rates. Calculate the rate for each of the two production departments. 4. Calculate the product cost of each model, using the departmental overhead rates calculated in requirement 3. 5. Calculate the price to be charged for each mode, assuming the company continues to price each product at 10 per cent above cost. Use the revised product coats calculated in requirement 4. Problem 2 (10 marks) Refer to the data given in Problem 1. The company has implemented an activity-based costing system for its manufacturing overhead costs with the activity cost pools and activity driver data below. Refer to the data given in Problem 1. The company has implemented an activity-based costing system for its manufacturing overhead costs with the activity cost pools and activity driver data below. ASSESSENT BRIEFS I MANAGEMENT ACCOUNTNG T3 2022 me8 Southern Cross plans to produce 1000 units of each model of fax machine Required: 1. For each activity, calculate the cost per unit of activity driver (e.g. the cost per setup) 2. Determine, under activity-based costing, the total overhead to be assigned to each product line. 3. Calculate, under activity-based costing, the overhead assigned per unit of each type of face machine. 4. Prepare a table comparing the total product cost assigned to each type of fax machine using a plantwide overhead rate, department overhead rates and activity-based costing. (This requirement relies on the solution to Problem 1) Southern Cross Telecommunications Ltd manufactures two different fax machines for the business market. Cost estimates for the two models for the current year are as follows: Each model of fax machine requires 20 hours of direct labour. The basic system requires 5 hours in Department A and 15 hours in Department B. The advanced system requires 15 hours in Department A and 5 hours in Department B. The budgeted overhead costs in these two production departments are as follows: The firm's management expects to operate at a level of 20000 direct labour hours in each production department during the current year. Required: 1. Show how the company's predetermined overhead rate was determined. 2. If the firm prices each model of fax machine at 10 per cent over its cost, what will be the price of each model? 3. Suppose the company were to use predetermined departmental overhead rates. Calculate the rate for each of the two production departments. 4. Calculate the product cost of each model, using the departmental overhead rates calculated in requirement 3. 5. Calculate the price to be charged for each mode, assuming the company continues to price each product at 10 per cent above cost. Use the revised product coats calculated in requirement 4. Problem 2 (10 marks) Refer to the data given in Problem 1. The company has implemented an activity-based costing system for its manufacturing overhead costs with the activity cost pools and activity driver data below
