Question

Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead. Mobile Safes Walk-in Safes Units planned for production 200 Material moves per product line Purchase orders per product line 350 1.700 Direct labor hours per product line ✓ Your answer is correct The total estimated manufacturing overhead was $272,000. Under traditional costing (which assigns overhead on the basis of direct labor hours). What amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, eg. 12.25.) 435.20 per unit (1) One mobile safe (2) One walk-in safe $ $ 3699.20 per unit Attempts: 1 of 7 used (61) The total estimated manufacturing overhead of $272.000 was comprised of $164,000 for materials handling costs and $108.000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, eg. 12.25.) What amount of materials handling costs are assigned to: (a) One mobile safe $ per unit (b) One walk-in safe $ per unit

Answer 1

Overhead per hour Estimated overheads/Estimated hours

= 272000/2500

= $108.8 per hour

One Mobile safe = 108.8*800/200 = $435.20 per unit

One walk in safe = 108.8*1700/50 = $3699.2

Handling cost

Mobile Safe = (164000*300/500)/200 = $492 per unit

Walk in = (164000*200/500)/50 = $1312 per unit

Purchase activity

Mobile = (108000*450/800)/200 = 303.75 per unit

Walk in = (108000*350/800)/50 = $945 per unit