Activity-Based Product Costing
Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.
Basic | Advanced | Total | ||||
Units produced | 90,000 | 270,000 | — | |||
Prime costs | $6,480,000 | $30,240,000 | $36,720,000 | |||
Machine hours | 90,000 | 450,000 | 540,000 | |||
Engineering hours | 400 | 3,600 | 4,000 | |||
Receiving orders | 500 | 1,500 | 2,000 | |||
Inspection hours | 900 | 1,800 | 2,700 | |||
Overhead costs: | ||||||
Machining | $5,940,000 | |||||
Engineering | 2,400,000 | |||||
Receiving | 400,000 | |||||
Inspecting products | 513,000 |
Required:
1. Calculate the four activity rates.
Machining rate | $___ per machine hour |
Engineering rate | $ ___per hour |
Receiving rate | $ ___per order |
Inspecting rate | $__ per hour |
2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.
Unit cost | |
Basic | $ ___per unit |
Advanced | $___ per unit |
Calculate the overhead cost per unit. Round your answers to the nearest cent.
Overhead Cost | |
Basic | $ ____per unit |
Advanced | $____ per unit |
3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity.
Cost assignment | |
Basic | $ |
Advanced | $ |
1) | |||||||
Total Overheads | Total Activity | Rate Per Activity | |||||
Machining | 59400000 | $ 5,40,000 | Machine Hours | $ 110 | Per Machine Hour | ||
Engineering | 24,00,000 | $ 4,000 | Machine hours | $ 600 | Per hour | ||
Receiving | 4,00,000 | $ 2,000 | Receiving orders | $ 200 | Per Oredr | ||
Inspecting products | 5,13,000 | $ 2,700 | Inspection hours | $ 190 | Per Hour | ||
2) | Calculation of the unit costs using activity rates. | ||||||
Basic | Advance | ||||||
Prime Cost | $ 72.00 | $ 112.00 | |||||
Overhead Cost | |||||||
Machining | $ 110.00 | $ 183.33 | |||||
(90000/90000*$110) | (450000/270000*110) | ||||||
Engineering | 2.67 | 8 | |||||
(400/90000*600) | (3600/270000*$600) | ||||||
Receiving | $ 1.11 | $ 1.11 | |||||
(500/90000*200) | (1500/270000*200) | ||||||
Inspecting products | $ 1.90 | $ 1.27 | |||||
(900/90000*190) | (1800/270000*190) | ||||||
total overhead cost | $ 115.68 | $ 193.71 | |||||
Unit Cost | $ 187.68 | $ 305.71 | |||||
(Prime Cost + Overhead Cost) | |||||||
Overhead Cost Per unit | $ 115.68 | $ 193.71 | |||||
3) | cost assignment for the inspection activity | ||||||
Basic = $513000/2700*900 | $ 1,71,000 | ||||||
Advance = $513000/27000*1800 | $ 3,42,000 |
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four...
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 130,000 390,000 — Prime costs $9,880,000 $42,120,000 $52,000,000 Machine hours 130,000 650,000 780,000 Engineering hours 500 4,500 5,000 Receiving orders 500 1,500 2,000 Inspection hours 1,000 2,000 3,000 Overhead costs: Machining $8,580,000 Engineering 3,000,000 Receiving 440,000 Inspecting products 360,000 Required: 1. Calculate the...
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Advanced Total Basic 150,000 $12,900,000 450,000 $51,300,000 $64,200,000 150,000 750,000 900,000 Units produced Prime costs Machine hours Engineering hours Receiving orders Inspection hours 300 2,700 3,000 400 1,200 1,600 900 1,800 2,700 $7,200,000 Overhead costs: Machining Engineering Receiving Inspecting products 1,290,000 624,000 405,000 Required: per machine hour 1....
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 140,000 420,000 Prime costs $11,760,000 $50,400,000 $62,160,000 Machine hours 140,000 700,000 840,000 Engineering hours 3,600 4,000 Receiving orders 300 1,200 Inspection hours 1,800 2,700 400 900 900 Overhead costs: Machining $9,240,000 2,240,000 Engineering Receiving 240,000 Inspecting products 297,000 Required: 1. Calculate the four...
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 150,000 450,000 $46,800,000 Prime costs $10,800,000 Machine hours 150,000 750,000 $57,600,000 900,000 2,000 200 1,800 Engineering hours Receiving orders Inspection hours 300 900 1,200 800 1,600 2,400 Overhead costs: Machining Engineering $9,000,000 860,000 468,000 Receiving Inspecting products 480,000 Required: 2. Calculate the unit...
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 150,000 Prime costs 450,000 $46,800,000 750,000 $10,800,000 150,000 $57,600,000 Machine hours 900,000 2,000 200 1,800 Engineering hours Receiving orders 300 1,200 Inspection hours 800 1,600 2.400 Overhead costs: $9,000,000 860,000 Machining Engineering Receiving Inspecting products 468,000 480,000 Required: 1. Calculate the four activity...
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 140,000 420,000 ------ Prime costs $9,800,000 $44,520,000 $54,320,000 Machine hours 140,000 700,000 840,000 Engineering hours 400 3,600 4,000 Receiving orders 400 1,200 1,600 Inspection hours ...
eBook Calculator Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 300,000 100,000 $8,000,000 Prime costs $30,000,000 $38,000,000 Machine hours 100,000 500,000 600,000 Engineering hours 400 3,600 4,000 Receiving orders 400 1,200 1,600 Inspection hours 800 1,600 2,400 Overhead costs: Machining Engineering Receiving Inspecting products $6,000,000 2,000,000 560,000 360,000 Required: 1. Calculate...
eBook Calculator Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 150,000 450,000 Prime costs $12,600,000 $45,000,000 $57,600,000 900,000 Machine hours 150,000 750,000 500 4,500 5,000 Engineering hours Receiving orders Inspection hours 200 600 800 800 1,600 2,400 Overhead costs: Machining Engineering $9,000,000 2,100,000 320,000 Receiving Inspecting products 480,000 Required: 1. Calculate...
eBook Calculator Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving and inspection. Information on these activities and their drivers is given below. Basic Advanced Total Units produced 100,000 300,000 Prime costs $8,000,000 $30,000,000 $38,000,000 Machine hours 100,000 500,000 600,000 Engineering hours 400 3.600 4,000 Receiving orders 400 1,600 2.400 800 Inspection hours 1,200 1,600 Overhead costs: Machining Engineering Receiving Inspecting products Required: $6,000,000 2,000,000 560,000 360,000 х Removing...
Activity-Based Product Costing Roberts Company produces two weed eaters: basic and advanced. The company has four activities: machining, engineering, receiving and inspection Information on these activities and their drivers is given below. Basic Advanced Total Units produced 150,000 450,000 Prime costs $10,500,000 $45,000,000 $55,500,000 Machine hours 150,000 750,000 900,000 Engineering hours 200 1,800 2,000 Receiving orders 300 900 Inspection hours 900 1,800 2,700 1.200 $9,900,000 Overhead costs: Machining Engineering Receiving Inspecting products 980,000 300,000 513,000 2. Calculate the unit costs...