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The Fast Learning Toy Company makes a variety of dolls at its operation in Munich. Its manufacturing process is highly automated. A recently installed
The Fast Learning Toy Company makes a variety of dolls at its operation in Munich. Its manufacturing process is highly automated. A recently installed ABC system has four activity centers: (Click the icon to view the activity center data.) Two dolls are called "Hansel" and "Gretel." They require 0.60 and 0.70 kg of materials, respectively, at a materials cost of 5.70 for Hansel and 5.25 for Gretel. One computer-controlled assembly line makes all dolls. When a production run of a different doll is started, a setup procedure is required to reprogram the computers and make other changes in the process. Normally, 500 Hansel dolls are produced per setup, but for Gretel dolls, only 200 are produced per setup. Products are packed and shipped separately so a request from a customer for, say, three different products is considered three different orders. Suppose the gift shop at the Munich Toy Museum (Spielzeugmuseum) just placed an order for 250 Hansel dolls and 100 Gretel dolls. Read the requirements. Requirement 1. Compute the cost of the products shipped to the Munich Toy Museum gift shop. (Round to two decimal places.) Unit costs: Direct materials Materials receiving and handling Hansel Dolls Gretel Dolls 5.70 5.25 Production setup Cutting, sewing, and assembly Total unit cost x Number of units Total cost of dolls Packing and shipping Total cost of order Requirements (...) 1. Compute the cost of the products shipped to the Munich Toy Museum gift shop. 2. Suppose the products made for the Munich Toy Museum gift shop required "Spielzeugmuseum" to be printed on each doll. Because of the automated process, printing the letters takes no extra time or materials, but it requires a special production setup for each product. Compute the cost of the products shipped to the Munich Toy Museum gift shop. 3. Explain how the activity-based-costing system helps Fast Learning Toy Company to measure costs of individual products or orders better than a traditional system that allocates all non-materials costs based on direct labor. Data table Print Done Activity Center Cost Driver Cost per Driver Unit Materials receiving and handling Production setup Kilograms of materials 0.90 per kg Cutting, sewing, and assembly Packing and shipping Number of setups Number of units 50 per setup 0.40 per unit Number of orders 7 per order Print Done - X
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