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Required information Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average m

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Answer #1

Answer:

1.

V-1 V-2
a. Using current costing system   $     9.55 $    19.1
b.   Using proposed ABC system   $     9.15 $    23.1

a.

Unit cost:
V-1 V-2
Direct Material $          2.00 $            4.00
Overhead (include labor) $          7.55 $          15.1
(7.55*1) (7.55*2)
Unit cost $          9.55 $          19.1

Working :

V-1 V-2 Total
Units produced         10,000         1,000
Machine hour per unit                   1                 2
Total Machine Hours         10,000         2,000       12,000
Total Overheads $   90600
Overheads per unit $90600/12,000 $        7.55 per MH

b.

Unit cost:
V-1 V-2
Direct Material $            2.00 $            4.00
Overhead (include labor) $            7.15 $          19.1
Unit cost $            9.15 $          23.1

Working :

a b a+b=c d d/c=e f=e*a g=e*b
Activity Activity Base V-1 V-2 Total Activity Cost Rate per activity V-1 V-2
Machine Depreciation Total Machine Hours 10000 2000 12000 $      51000 $              4.25 $         42500 $              8500
Set up labor No of Production Runs 80 40 120 $      24000 $          200 $         16000 $              8000
Material Handling Direct Material Cost 20000 4000 24000 $      15600 $              0.65 $         13000 $              2600
$         71500 $            19100
No of Units 10000 1000
Overhead cost per unit $                  7.15 $                   19.1
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