Question

Check my work Required information The following information applies to the questions displayed below.) Part 1 of 5 128 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. points Book Print 40 runs 40 runs References planned annual production: Volume in units Production runs Direct material Direct labor! (not including setup) Machine hours (MH) per product unit Total MR consused by product line in a year 5,000 125 units $129 $171 $19 / hr.) 4,000 100 units $151 $209 $19/hr.) 1.000 20 runs 50 units $203 $247 (13 hrs. $19/hr.) (9 hrs. (11 hrs. 10 MH 50,000 (10 MHM 5.000) 12 MH 48.000 (12 MH M 4,000) 17 MH 17,000 (17 MIN 1.000) The annual budgeted overhead is $1,224,000, and the company's predetermined overhead rate is $12 per direct labor hour. The product costs for the three product models, as reported under the plants traditional costing system, are shown in the following table.

Answer 1

Answer-1:

I

Product REG ADV GMT Production units DLH per unit Total DLH 5,000 9 45,000 4,000 11 44,000 1,000 13 13,000 Total Direct labor hour 102,000

Pre-determined overhead rate = $1,224,000 / 102,000 = $12

Answer-2:

Activity	Activity cost pool	Cost driver	Cost driver quantity	Pool rate	Product Line	Cost driver quantity for product line	Activity cost for product line	Product line production volume	Activity cost per unit of product
Material 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
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
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
Set up	$        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
Inspection	$        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
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
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
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

Answer-3:

	REG	ADV	GMT
Direct material	$                129	$                151	$                 203
Direct labor	171	209	247
Total direct cost per unit	$                300	$                360	$                 450
Manufacturing overhead:
Material related	27.00	32.40	45.90
Material handling	4.20	5.25	10.50
Purchasing	5.00	6.00	26.00
Set up	6.80	8.50	17.00
Inspection	2.00	2.50	7.50
Shipping	6.00	6.00	12.00
Engineering	2.50	2.50	10.00
Facility	50.00	60.00	85.00
Total ABC overhead cost per unit	103.50	123.15	213.90
Total product cost per unit	$          403.50	$          483.15	$           663.90

Answer-4:

	REG	ADV	GMT
Reported unit overhead cost:
Traditional, volume-based costing system	$          108.00	$          132.00	$           156.00
Activity-based costing system	$          103.50	$          123.15	$           213.90
Reported unit product cost
Traditional, volume-based costing system	$          408.00	$          492.00	$           606.00
Activity-based costing system	$          403.50	$          483.15	$           663.90
Sales price data:
Original target price	$          530.40	$          639.60	$           787.80
New target price	$          524.55	$          628.10	$           863.07
Axtual current price	$          525.00	$          628.00	$           800.00