Homework Answers
ABC costing uses different cost drivers for different activities to allocate cost to its products.
(1)
| Model 145 | Model 212 | |||||||||||
| Activity | Costs | Activity expected | Activity rate | Activity driver | Cost Assigned | Activity driver | Cost Assigned | |||||
| Components | ||||||||||||
| Changeover | $609,650 | 890 | Number of batches | $685 [609,650/890] | per batch | 445 | 304,825[445*$685] | 445 | $304,825[445*$685] | |||
| Machining | $357,240 | 7,800 | Machine hours |
$45.8 [357,240/7800] |
per machine hour | 2450 | $112,210[$45.8*2450] | 5350 | $245,030[$45.8*5350] | |||
| Setups | $182,000 | 100 | Setups |
$1,820 [182,000/100] |
per setup | 50 | 91,000[$1820*50] | 50 | 91,000[$1820*50] | |||
| FINISHING | ||||||||||||
| Welding | $312,360 | 5,700 | Welding hours |
$54.8 [312,360/5700] |
per welding hour | 1800 | 98,640[$54.8*1800] | 3900 | 213,720[3900*$54.8] | |||
| Inspecting | $321,475 | 835 | Inspections |
$385 [321,475/835] |
per inspection | 505 | $194,425[$385*505] | 330 | $127,050[$385*330] | |||
| Rework | $53,300 | 260 | Rework orders |
$205 [53300/260] |
per rework order | 140 | $28,700[$205*140] | 120 | $24,600[$205*120] | |||
| Support | ||||||||||||
| Purchasing | $177,375 | 473 | Purchase orders |
$375 [177375/473] |
per purchase order | 118,125[$375*315] | 158 | 59,250[$375*158] | ||||
| Providing space and utilities | $158,760 | 8400 | units |
$18.9 [158760/8400] |
per unit | 2800 | $52,920[$18.9*2800] | 5600 | $105,840[$18.9*5600] | |||
| Total overhead cost | 1,000,845 | $1,171,315 | ||||||||||
| units produced | 2800 | 5600 | ||||||||||
| cost per unit | $357.44[1,008,845/2800] | $209.16[1,171,315/5600] | ||||||||||
(2) cost per unit
| 145 | 212 | |||
| Material an labor | $230 | $113 | ||
| overhead cost | $357.44 | $209.16 | ||
| Total cost | $587.44 | $322.16 | ||
| [$230+357.44] | [$113+$209.16] |
(3)
| 145 | 212 | |||
| Price per u nit | $587.98 | $322.50 | ||
| cost per unit | 587.44 | $322.16 | ||
| Profit(Loss ) | $0.54($587.98-587.44) | $0.34($322.50-322.16) | ||
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