Question

Answer following questions based on the scenano Zany Brainy: Zany Brainy Corp. manufactures two types of lamps, Home size and Industry size lamps. Company produces 15,000 Home size lamp and 5,000 Industry Size lamps. Following is the data provided about these two products: Total Home size Industry lamp size lamp $7 $12 $12.00 $12.00 0.50 0.6 $120.000 Direct Materials per unit Direct manufacturing labour rate per unit Direct labour hours per unit Set up costs Lamps produced per patch Set up hour per patch Quality control costs Total indirect manufacturing costs Annual production 200 50 1 3 $160,000 $280.000 15.000 5.000

Answer 1

Answer

a Home size lamp Product cost per unit under traditional system Particulars Production (a) Direct labor hours per unit (b) Direct labor hours (c) 15,000 0.50 Industry size lamp 5,000 0.600 3,000.00 7,500.00 $ Total Indirect manufacturing costs (a) Direct labor hours (b) Overhead rate c=(a/b) 280,000.00 10,500 =7500+3000 $ 26.67 Particulars Home size lamp Industry size lamp 15,000 5,000 Production (d) Direct labor hours per unit (e) 0.50 0.60 $ 12.00 12.00 $ Direct Materials per unit (f) Direct labor cost per unit (8) Overhead cost per unit (h=e*26.67) Total product cost per unit (i = f+g+h) Total product cost (i*d) $ 7.00 $ 12.00$ 13.33 $ 32.33 $ 485,000.00 $ 16.00 $ 40.00 200,000.00 $
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4 b Industry size lamp Product cost per unit under ABC system Particulars Production (a) Lamps produced per patch (b) Number of patches (c=a/b) Set up hours per patch (d) Setup labor hours per unit (cd) Home size lamp 15,000 200 5,000 50 75 100 1 3 3 75 300 Overhead: Cost (d) Cost Driver Home size lamp Industry size lamp Total Activities (c= Rate per Activity Home size lamp Cost Industry size lamp Cost Activities (a) Activities (b) a+b) (e=d/c) (e*a) (eb) 75 300 375 $ 320.00 $ 24,000.00 $ 96,000.00 7,500 3,000 10,500 $ 15.24 $ 114,285.71 $ 45,714.29 Setup costs Machine costs $ 120,000.00 Set up labour hours 160,000.00 Direct labor hours $ Total Overhead Cost (1) S 280,000.00 $ 138,285.71 S 141,714.29 5,000 15,000 Units (g) Total Overhead Cost per unit (h=f/g) $ 9.22 $ 28.34 Industry size lamp Particulars Production (d) Home size lamp 15,000 5,000 0.60 Direct labor hours per unit (e) 0.50 $ 12.00 $ Direct Materials per unit (f) Direct labor cost per unit (8) Overhead cost per unit (h) Total product cost per unit (i = f+g+h) Total product cost (id) 7.00 $ 12.00 $ 9.22 $ 12.00 $ 28.34 $ 52.34 28.22 $ 423,285.71$ $ 261,714.29