Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Traditional Product Costing Versus Activity-Based Costing High Country Outfitters, Inc., makes backpacks for large sporting goods chains that are sold under the customers' store brand

Traditional Product Costing Versus Activity-Based Costing High Country Outfitters, Inc., makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The accounting department has identified the following overhead costs and cost drivers for next year:

Overhead Item Expected Costs

Cost Driver

Maximum Quantity
Setup costs

$1,404,000

Number of setups

7,200
Ordering costs

360,000

Number of orders

60,000
Maintenance

1,200,000

Number of machine hours 80,000
Power

120,000

Number of kilowatt hours

600,000

Total predicted direct labor hours for next year is 60,000. The following data are for two recently completed jobs:

Job 201 Job 202
Cost of direct materials $18,500 $20,000
Cost of direct labor $24,125 $76,250
Number of units completed 1,125 915
Number of direct labor hours 270 330
Number of setups 18 22
Number of orders 24 45
Number of machine hours 540 450
Number of kilowatt hours 270 360

a. Determine the unit cost for each job using a traditional company-wide overhead rate based on direct labor hours. Round rate to two decimal places. Overhead rate per direct labor hour $Answer 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.

Job 201 Job 202
Direct materials $Answer $Answer
Direct labor Answer Answer
Overhead Answer Answer
Total job cost Answer Answer
Units Answer Answer
Per unit cost $Answer $Answer

b. Determine the unit cost for each job using ABC. Activity-based overhead rates:

Round cost answers to the nearest whole number, when needed.

Round cost per unit to two decimal places, if needed.

Setup costs

$Answer per setup

Ordering costs

$Answer per order

Maintenance costs $Answer per machine hour
Power

$Answer per kwh

Job 201 Job 202
Direct materials $Answer $Answer
Direct labor Answer Answer
Overhead
Setup cost Answer Answer
Ordering costs Answer Answer
Maintenance costs Answer Answer
Power Answer Answer
Total job costs $Answer $Answer
Units produced Answer Answer
Cost per unit $Answer $Answer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

SAP Audit Black Book

Authors: Bhushan Jairamdas Mamtani

1st Edition

9351194086, 978-9351194088

More Books

Students also viewed these Accounting questions