Waterway, Inc. produces two types of gas grills: a family model and a deluxe model. Waterway's...

Transcribed Image Text:

Waterway, Inc. produces two types of gas grills: a family model and a deluxe model. Waterway's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations: Family Model Deluxe Model Direct labor costs Machine hours Setup hours $74.400 $148,800 2.000 2,000 200 800 Total estimated overhead costs are $446,400. Overhead cost allocated to the machining activity cost pool is $267,840 and $178.560 is allocated to the machine setup activity cost pool. (a) Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 15.25.) Overhead rate $ Crane Toys & Games, Inc. manufactures specialty toys. Crane uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Crane assigns its quality-control overhead costs to all products at a rate of 22% of direct labor costs. Its direct labor cast for the month of August for its toddler line of toys is $338.000. In response to repeated requests from its financial vice president, Crane's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: Number of Cost Drivers Used per Activity Activity Cost Pools Materials Inspection Cost Drivers Number of pounds Overhead Rate Assembly Line Inspection National Toy Association Certification Number of finished toys Retailorders $0.70 per pound $0.16 per toy $2.00 per order 51,000 pounds 213,000 toys 1,100 orders (a) Compute the quality-control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing Quality-Control Overhead Cost Traditional costing $ Activity-based costing $ Sunland Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20000 units annually. Planter is a low-volume item totaling only 6000 units per year. Flower requires one hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32000 (20000 12000). Estimated annual manufacturing overhead costs are $860000. Sunland uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of O $26.88. O $33.08. $53.75. O need more information to compute. Waterway, Inc. produces two types of gas grills: a family model and a deluxe model. Waterway's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations: Family Model Deluxe Model Direct labor costs Machine hours Setup hours $74.400 $148,800 2.000 2,000 200 800 Total estimated overhead costs are $446,400. Overhead cost allocated to the machining activity cost pool is $267,840 and $178.560 is allocated to the machine setup activity cost pool. (a) Compute the overhead rate using the traditional (plantwide) approach. (Round answer to 2 decimal places, e.g. 15.25.) Overhead rate $ Crane Toys & Games, Inc. manufactures specialty toys. Crane uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Crane assigns its quality-control overhead costs to all products at a rate of 22% of direct labor costs. Its direct labor cast for the month of August for its toddler line of toys is $338.000. In response to repeated requests from its financial vice president, Crane's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: Number of Cost Drivers Used per Activity Activity Cost Pools Materials Inspection Cost Drivers Number of pounds Overhead Rate Assembly Line Inspection National Toy Association Certification Number of finished toys Retailorders $0.70 per pound $0.16 per toy $2.00 per order 51,000 pounds 213,000 toys 1,100 orders (a) Compute the quality-control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing Quality-Control Overhead Cost Traditional costing $ Activity-based costing $ Sunland Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20000 units annually. Planter is a low-volume item totaling only 6000 units per year. Flower requires one hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32000 (20000 12000). Estimated annual manufacturing overhead costs are $860000. Sunland uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of O $26.88. O $33.08. $53.75. O need more information to compute.