Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tuggs Corporation manufactures two products, Racket and Table. Table, having been developed as an attempt to enter a market closely related to that of Racket,

Tuggs Corporation manufactures two products, Racket and Table. Table, having been developed as an attempt to enter a market closely related to that of Racket, has been recently created. Of the two products Table is the more complex one thus requiring two and a half hours of direct labour time per unit to manufacture, compared to one hour of direct labour time for Racket. Table is produced on an automated production line.

On the basis of direct labour hours Overhead is currently assigned to the products. The company

estimated it would incur $364,000 in manufacturing overhead costs and produce 4,900 units of Table and 22,100 units of Racket during the current year. Unit costs for materials and direct labour are as follows:

Racket Table

Direct materials $9 $20

Direct labour $7 $15

Required:

1.Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year.

2.The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below:

Expected Activity

Activity Cost Pool Estimated Overhead Cost Racket Table Total

Machine setups required $161,000 800 700 1,500

Purchase orders issued $32,000 200 150 350

Machine hours required $81,000 3,900 7,000 10,900

Maintenance requests issued $90,000 310 510 820

Total $364,000

Determine the unit product cost of each product for the current year using the data above and an activity-based costing approach.

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

Principles Of Financial Accounting

Authors: Belverd E Needles, Marian Powers

11th Edition

0538755164, 9780538755160

More Books

Students also viewed these Accounting questions