Your company is Boysenberries Company Your company manufactures two sizes of box springs: twin and double Presented below is the budget estimates for material
Your company is Boysenberries Company Your company manufactures two sizes of box springs: twin and double Presented below is the budget estimates for material cost & labor cost per unit and the budgeted overhead within the activity cost pools. Production Data Material Cost per unit Labor Cost per unit Budgeted Production Estimate Activity Cost Pool Framing Padding Filling Labeling Inspection Twin 27 50 4800 Driver Square feet of pine Square feet of quiting Square feet of filling Number of boses Number of inspections Double 41 64 8700 Estimated Overhead 195,800 194400 320,700 250,100 234.200 Use per Twin 4,661 108,000 501,093 833.666 15.613 Use per Double 1,865 86,400 300,657 416,814 7,807 A) If the company currently uses a traditional plantwide overhead allocation rate based of 150% of labor cost, calculate the unit cost of the twin and double boxsprings. B) The company is investigating the use of activity-based costing and has created the activity cost pools shown above. Calculate the unit cost of the twin and double boxsprings using ABC. Note: The use of ABC or traditional costing does not change the total overhead amount but instead simply changes the way it is allocated. q Analyze the results. If you believe the ABC numbers are more accurate, discuss the potential impact to pricing of the twin and double if the sales price is determined by the cost.
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