Question

eBook Calculator Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $20 per unit and $35 is used in direct labor, while the direct material for the double is $35 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 10,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: Activity Cost Estimated Use per Use per Pools Driver Overhead Twin Double Framing Square Feet of Pine $280,000 6,000 2,000 Padding Square Feet of Quilting 210,000 110,000 100,000 Filling Square Feet of Filling 320,000 550,000 250,000 Labeling Number of Boxes 240,000 300,000 400,000 Inspection Number of Inspections 153,000 12,000 5,000 How much does each unit cost to manufacture? Do not round intermediate computations but round final answers for the fields below to the nearest whole number. Total Cost per Unit Double Direct Material $ Direct Labor Cost Twin 20 35 109 x AND 35 50 45.6 x Overhead Total per Unit 6:51 PM

Answer 1

A 4 1 3 Framing 4 Padding 5 Filling 6 Labelling 7 Inspection Estimated Overhead (a) Use per Twin (b) Use per Double (c) Total use (D) = (B+C) Cost per driver (E) = (A/D) 280,000 6,000 2,000 8.000 $ 35.00 210,000 110,000 100,000 210,000 $ 1.00 320,000 550,000 250,000 800,000 $0.40 240,000 800,000 400,000 1,200,000 153,000 12,000 5,000 17,000 $9.00 $ 0.20 8 Twin 9 10 11 Pools 12 Framing 13 Padding 14 Filling 15 Labelling 16 Inspection 17 Total 18 19 20 Total cost per unit 21 Direct material 22 Direct labor cost 23 Overhead 24 Total per unit 25 Overhead allocation Double $ 210,000 $70,000 $ 110,000 $ 100,000 $ 220,000 $ 100,000 $ 160,000 $ 80,000 $ 108,000 $ 45,000 $ 808,000 $395,000 Total $ 280,000 $ 210,000 $ 320,000 $ 240,000 $ 153,000 $ 1,203,000 17 Total Twin Double $ 20 $ 35 $501 $ 35 $ 162 $ 217 $ 79 $ 164

Working note:

1 2 Pools 3 Framing 4 Padding 5 Filling 6 Labelling 7 Inspection Estimated Overhead (a) Use per Twin (b) Use per Double (c) Total use (D) = (B+C) Cost per driver (E) = (A/D) 280000 6000 2000 =C3+D3 =B3/E3 210000 110000 100000 =C4+D4 =B4/E4 320000 550000 250000 =C5+D5 =B5/E5 240000 800000 400000 =C6+D6 =B6/E6 153000 12000 5000 =C7+D7 =B7/E7 Twin C33 A*F4 10 11 Pools 12 Framing 13 Padding 14 Filling =C5*F5 15 Labelling =C6*F6 16 Inspection =C7*F7 17 Total =SUM(B12:B16) 18 19 20 Total cost per unit Twin 21 Direct material 22 Direct labor cost 23 Overhead =B17/5000 24 Total per unit =B21+B22+B23 Overhead allocation Double =D3*F3 =D4*F4 =D5*F5 =D6*F6 =D7*F7 =SUM(C12:C16) Total =B12+C12 =B13+C13 =B14+C14 =B15+C15 =B16+C16 =B17+C17 Double =C17/5000 =C21+C22+C23