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Stuart Electronics produces video games in three market categories: commercial, home, and miniature. Stuart has traditionally allocated overhead costs to the three products using the
Stuart Electronics produces video games in three market categories: commercial, home, and miniature. Stuart 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 Total Pooled Cost $420,000 Types of Costs Cost Driver Unit Indirect labor wages, supplies, factory utilities, machine maintenance Machine hours Batch 239, 409 Number of production orders Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Product 120,600 315,000 Facility Rent, general utilities, maintenance, facility. depreciation, admin. salaries Time spent by research department Square footage Additional data for each of the product lines follow: Home Miniature Direct naterials cost Direct labor cost Commercial $25.15/unit $10.75/hour 6,000 10,000 $ 15.15/unit $ 8.75/hour 12,000 $ 12.15/unit $ 9.75/hour Number of labor hours. Number of machine hours 45,000 2,000 25,000 Number of production orders. 200 2,000 800 Research and development tine Number of units 15,000 45,000 14,000 Square footage 20,000 50,000 30,000 10% 20% 70% Total 20,000 80,000 3,000 74,000 100,000 100% 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. (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.) Type of Product Total Cost Cost per Unit a Commercial Home Miniature b. Commercial Home Miniature Combined total Combined total $ $ 0 0
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