Homework Answers
Answer:
| Type of product | Total cost | Unit cost | |
| a. | Commercial | $1,386,180 | $77.01 |
| Home | $2,609,120 | $59.30 | |
| Miniature | $799,330 | $47.02 | |
| Combined total | $4,794,630 | ||
| b. | Commercial | $1,135,228 | $63.07 |
| Home | $2,551,938 | $58.00 | |
| Miniature | $1,107,464 | $65.14 | |
| Combined total | $4,794,630 |
Calculations:
Material cost:
commercial = 18000*36.4 = $655,200
Home = 44000*25 = $1,100,000
Miniature = 1700*30.5 = $518,500
Direct labour cost:
commercial = 6200*13.9 = $86,180
Home = 12800*13.9 = $177,920
Miniature = 2300*18.1 = $41,630
a. Overhead cost: (Direct labour hours basis)
Total pooled cost = 619200+876700+212000+507300= $2,215,200
commercial = 2215200*(6200/21300) = $644,800
Home = 2215200*(12800/21300) = $1,331,200
Miniature = 2215200*(2300/21300) = $239,200
Total cost:( Material cost+Direct labour cost+overhead cost)
commercial = $1,386,180 ; Unit cost = 1386180/18000 = $77.01
Home = $2,609,120 ; unit cost = 2609120/44000 = $59.30
Miniature = $799,330 ; unit cost = 799330/17000 = $47.02
b. Overhead cost: (ABC Basis)
| Category | Cost driver | Total cost | Commercial | Home | Miniature |
| Unit | Machine hours | $619,200 |
$129,000 (619200*(15000/72000)) |
$387,000 (619200*(45000/72000)) |
$103,200 (619200*(12000/72000)) |
| Batch | No. of production orders | $876,700 |
$68,188 (876700*(210/2700)) |
$681,878 (876700*(2100/2700)) |
$126,634 (876700*(390/2700)) |
| Product | Time spent by research department | $212,000 |
$27,560 (212000*0.13) |
$36,040 (212000*0.17) |
$148,400 (212000*0.70) |
| Facility | square footage | $507,300 |
$169,100 (507300*(1/3)) |
$169,100 (507300*(1/3)) |
$169,100 (507300*(1/3)) |
| Total Overhead cost | $2,215,200 | $393,848 | $1,274,018 | $547,334 |
(Note: square footage occupied by each product is assumed to be equal)
Total cost:( Material cost+Direct labour cost+overhead cost)
commercial = $1,135,228 ; Unit cost = 1135228/18000 = $63.07
Home = $2,551,938 ; unit cost = 2551938/44000 = $58.00
Miniature = $1,107,464 ; unit cost = 1107464/17000 = $65.14
Thank you.
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