Question

Product-Costing Accuracy, Plantwide and Departmental Rates, ABC

Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. SOLVE PLEASE

Product-Costing Accuracy, Plantwide and Departmental Rates, ABC Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products: Units produced per year Prime costs Direct labor hours Machine hours Production runs Inspection hours Maintenance hours Product-Related Data Scientific Business 77,000 770,000 $233,000 $2,330,000 100,000 1,000,000 48,300 483,000 100 150 2,000 3,000 2,250 9,000 Department Data Department 1 Department 2 Direct labor hours: Scientific calculator Business calculator Total Machine hours: Scientific calculator Business calculator 77,800 130,000 207,800 22,200 870,000 892,200 22,900 384,720 25,400 98,280

Answer 1

Escuha Company 1.50 (838500 + 808500)/(207800 + 892200) Requirement 1 Plant wide rate per direct labor hour $ Overhead cost per unit: Scientific $ Business $ 8.385 0.8085 838500 / 100000 808500 / 1000000 Requirement 2 Departmental rates: Department 1 (per machine hour) $ Department 2 (per direct labor hour) $ 2.06 0.906 838500 / 407620 808500 / 892200 Overhead Cost per unit: Scientific $ Business $ 10.89 1.05 838500 / 77000 808500 / 770000 Departmental rates: Department 1 (per direct labor hour) $ Department 2 (per machine hour) $ 4.04 6.54 838500 / 207800 808500 / 123680 Overhead Cost per unit: Scientific $ Business $ 8.385 0.8085

Requirement 3 Unit produced per year Prime cost Direct labour hours Machine hours Production run Inspection hours Maintenance hours Scientific 77000.00 233000.00 100000.00 48300.00 100.00 2000.00 2250.00 Buisness 770000.00 2330000.00 1000000.00 483000.00 150.00 3000.00 9000.00 Total 847000.00 2563000.00 1100000.00 531300.00 250.00 5000.00 11250.00 Overhead costs Setup costs Inspection costs Power Maintenace Department 1 $2,25,500.00 $1,60,000.00 $2,56,000.00 $1,97,000.00 $8,38,500.00 Department 2 $2,25,500.00 $1,60,000.00 $1,70,000.00 $2,53,000.00 $8,08,500.00 Total $4,51,000.00 $3,20,000.00 $4,26,000.00 $4,50,000.00 $16,47,000.00 Calculating the overhead cost per unit: Setup costs Inspection costs Power Maintenace Scientific 41000.00 128000 38727.3 90000 297727.3 3.9 Business 410000.00 192000 387272.7 360000 1349272.7 Per unit cost 1.8

Requirement 3 Scientific Buisness Total Unit produced per year Prime cost Direct labour hours Machine hours Production run Inspection hours Maintenance hours =C7 =C8 =C9 =C10 =C11 =C12 =C13 =D7 =D8 =D9 =D10 =D11 =D12 =D13 =C65+D65 =C66+D66 =C67+D67 =C68+D68 =C69+D69 =C70+D70 =C71+D71 Total Overhead costs Setup costs Inspection costs Power Maintenace Department 1 =C28 =C29 =C30 =C31 =C75+C76+C77+C78 Department 2 =D28 =D29 =D30 =D31 =D75+D76+D77+D78 =C75+D75 =C76+D76 =C77+D77 =C78+D78 =C79+D79 Calculating the overhead cost per unit: Setup costs Inspection costs Power Maintenace Scientific =((E75/E66) *C66) =(E76/E70) *C70 =(E77/E68) *C68 =(E78/E71) *C71 =SUM(C82:C85) =C86/C65 Business =((E75/E66) *D66) =(E76/E70) *D70 =(E77/E68) *D68 =(E78/E71) *D71 =SUM(D82:D85) =D86/D65 Per unit cost