Question

ACC 212 Challenge Activity-Based Costing HEY Company has been concerned about the profitability of the company product lines wants you to examine the current station using traditional approach of locating overhead he wants you to apy Art Based Costin (ABC) to develop a new product cost for each product the wants your own about the best approach to use to determine the producti o n he Revenue: The expected level of sales is 200 units of each product Product A Product priceperit price per $12.000 $19.000 Costs The expected level of production is 200 units of each product 1. Direct Material cost per unit Product A Direct Material cost per unit Product $5,400 58.370 2. Direct Labor cost per unit Product A Direct Labor cost per unit Product $340 5700 3. Factory Overhead Activities: a. Every product is inspected. b. Product A moving parts oiled: Product B moving parts oiled: 5 parts per unit 3 parts per unit c. Material is delivered to each of the product lines on a daily basis. Product A 5 times per week Product B 5 times per week d. Product A redesign: Product Bredesign: 5 hours per week 20 hours per week e. Product A supplier purchase orders: Product B supplier purchase orders: 5 times per week 2 times per month f. Facility administration is based on square footage: Product A 12,000 square feet Product B 8,000 square feet Activity Inspection Lubricating oil Material handling Product design Purchase orders Facility Administration Total factory overhead Total Estimated Annual Activity Cost Cost Driver units oil applications deliveries redesign hours purchase orders square footage Estimated Cost $93.000 $5,800 $12,200 $121,000 $48.000 $32,000 $312.000

Answer 1

1.

	Direct Labor cost per unit	Overhead allocation per unit	Total Overhead
Product A	$              340	$              510	$     102,000
Product B	$              700	$          1,050	$     210,000
Total			$     312,000

2.a.

Cost Driver	Product A	Product B	Total
# product inspected	200	200	400
# applications	1000	600	1600
# deliveries	260	260	520
# redesign hours	260	1040	1300
# purchase orders	260	24	284
square footage	12000	8000	20000

b.

Activity	Estimated Cost	Total Activity	Planned Activity Rate
Inspection	$        93,000	400	$     232.500
Lubrication Oil	$          5,800	1600	$          3.625
Material Handling	$        12,200	520	$        23.462
Product design	$     121,000	1300	$        93.077
Purchase Orders	$        48,000	284	$     169.014
Facility Administration	$        32,000	20000	$          1.600

c.

Activity	Product A	Product B	Total
Inspection	$        46,500	$        46,500	$        93,000
Lubrication Oil	$          3,625	$          2,175	$          5,800
Material Handling	$          6,100	$          6,100	$        12,200
Product design	$        24,200	$        96,800	$     121,000
Purchase Orders	$        43,944	$          4,056	$        48,000
Facility Administration	$        19,200	$        12,800	$        32,000
Total	$     143,569	$     168,431	$     312,000
Overhead per unit	$              718	$              842

3.

Factory Overhead	Traditional	ABC	Difference
Product A	$     102,000	$     143,569	$      -41,569
Product B	$     210,000	$     168,431	$        41,569
Total	$     312,000	$     312,000	$                 -

4.

Traditional Method	Product A	Product B
Direct Material	$          5,400	$          8,370
Direct Labor	$              340	$              700
Factory Overhead	$              510	$          1,050
Total cost per unit	$          6,250	$        10,120
ABC Method	Product A	Product B
Direct Material	$          5,400	$          8,370
Direct Labor	$              340	$              700
Factory Overhead	$              718	$              842
Total cost per unit	$          6,458	$          9,912

As per HOMEWORKLIB RULES we are suppose to answer 4 parts, i have answered 6, so kindly post others separately