Question

Required information The following information applies to the questions displayed below.] Kitchen King's Toledo plant manufactures three product lines, all multi-burner, ceramic cook tops. The plant's three product models are the Regular (REG), the Advanced (ADV), and the Gourmet (GMT). Until recently, the plant used a job- order product-costing system, with manufacturing overhead applied on the basis of direct-labor hours. The following table displays the basic data upon which the traditional costing system was based REG ADV GMT Planned annual production: Volume in units Production runs 5,000 40 runs of 125 units $129 4,000 40 runs of 100 units $151 1,000 20 runs of 50 units $203 Direct material Direct labor: Machine hours (MH) Total machine hours consumed (not including setup) per product unit by product line in a year $171 (9 hrs. $19 per hr.) 10 MH 50,000 (10 MH x 5,000) $209 (11 hrs. $19 per hr.) 12 MH 48,000 (12 MH x 4,000) $247 (13 hrs.@ $19 per hr.) 17 MH 17,000 (17 MH x 1,000)

Answer 1

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Activity	Activity Pool	Cost driver	Cost driver Quantity	Pool Rate	Product Line	Cost Driver Quantity for	Activity Cost for	Product Line	Activity Cost per
						Product Line	Product Line	Production Vol	Unit of Product
	A		B	C=A/B		D	E=D*C	F	E/F
Machine Related	$      310,500	Machine Hours	115,000	$       2.70	REG	50,000	$             135,000	5,000	$                 27.00
					ADV	48,000	$             129,600	4,000	$                 32.40
					GMT	17,000	$               45,900	1,000	$                 45.90
					Total	115,000	$             310,500
Material Handling	$        52,500	Production Runs	100	$   525.00	REG	40	$               21,000	5,000	$                   4.20
					ADV	40	$               21,000	4,000	$                   5.25
					GMT	20	$               10,500	1,000	$                 10.50
					Total	100	$               52,500
Purchasing	$        75,000	Purchase Orders	300	$   250.00	REG	100	$               25,000	5,000	$                   5.00
					ADV	96	$               24,000	4,000	$                   6.00
					GMT	104	$               26,000	1,000	$                 26.00
					Total	300	$               75,000
Setup	$        85,000	Production Runs	100	$   850.00	REG	40	$               34,000	5,000	$                   6.80
					ADV	40	$               34,000	4,000	$                   8.50
					GMT	20	$               17,000	1,000	$                 17.00
					Total	100	$               85,000
Inpection	$        27,500	Inspection Hours	1,100	$     25.00	REG	400	$               10,000	5,000	$                   2.00
					ADV	400	$               10,000	4,000	$                   2.50
					GMT	300	$                 7,500	1,000	$                   7.50
					Total	1,100	$               27,500
Shipping	$        66,000	Shipments	1,100	$     60.00	REG	500	$               30,000	5,000	$                   6.00
					ADV	400	$               24,000	4,000	$                   6.00
					GMT	200	$               12,000	1,000	$                 12.00
					Total	1,100	$               66,000
Engineering	$        32,500	Engineering Hours	650	$     50.00	REG	250	$               12,500	5,000	$                   2.50
					ADV	200	$               10,000	4,000	$                   2.50
					GMT	200	$               10,000	1,000	$                 10.00
					Total	650	$               32,500
Facility	$      575,000	Machine Hours	115,000	$       5.00	REG	50,000	$             250,000	5,000	$                 50.00
					ADV	48,000	$             240,000	4,000	$                 60.00
					GMT	17,000	$               85,000	1,000	$                 85.00
					Total	115,000	$             575,000