Question
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 | $1,216,800 | Number of setups | 7,200 |
Ordering costs | 312,000 | 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 | $15,000 | $16,500 |
Cost of direct labor | $20,625 | $72,750 |
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
Mark 0.00 out of 1.00
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 Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Direct labor | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Overhead | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Total job cost | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Units | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Per unit cost | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
b. Determine the unit cost for each job using ABC. Activity-based overhead rates:
Round answers to two decimal places, if needed.
Setup costs | Answer Mark 0.00 out of 1.00 per setup
|
Ordering costs | Answer Mark 0.00 out of 1.00 per order
|
Maintenance costs | Answer Mark 0.00 out of 1.00 per machine hour |
Power | Answer Mark 0.00 out of 1.00 per kwh
|
NOTE: Round all answers (except cost per unit) to the nearest whole number, when applicable. Round cost per unit answers to two decimal places.
Job 201 | Job 202 | |
---|---|---|
Direct materials | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Direct labor | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Overhead | ||
Setup cost | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Ordering costs | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Maintenance costs | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Power | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Total job costs | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Units produced | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
Cost per unit | Answer Mark 0.00 out of 1.00 | Answer Mark 0.00 out of 1.00 |
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