1) computation of amount of the cost pool for each of four activities :
factory costs | set up | assembly | inspecting and finishing | packaging | |
salaries | $844000 | $844000 x 15% = $126600 | $844000 x 55 % = $464200 | $844000 x 20% = $168800 | $844000 x 10 % = $84400 |
supplies | $144000 | $144000 x 20% = $28800 | $144000 x 60% = $86400 | $144000 x 20% = $28800 | |
factory expenses | $544000 | $544000 x 80% = $435200 | $544000 x 20% = $108800 | ||
total | $1532000 | $155400 | $985800 | $306400 | $84400 |
2) computation of activity driver rates for assigning factory costs to two products :
activities | cost driver | total costs | activity driver | activity driver rates |
set up | batch | $155400 | 190 + 540 = 730 batches | $155400/730 = $212.877 |
assembly | units | $985800 | 54000 + 66000 = 120000 units | $985800/120000 = $8.215 |
inspecting and finishing | finishing hours | $306400 | (54000 x 0.20 + 66000 x 0.30) = 30600 finishing hours | $306400/30600 = $10.013 |
packaging | packaging hour | $84400 | (54000 x 0.10 + 66000 x 0.15) = 15300 packaging hours | $84400/15300 = $5.516 |
3) calculation of activity based unit cost for each of the products :
particular | rates |
safe-V (54000 units) |
safe-T (66000 units) |
material | $3.5 : $6 per unit | 54000 x $3.50 = $189000 | 66000 x 6 = $396000 |
set up | $212.88per batch | 190 x $212.877 = $40446.63 | 540 x $212.77 = $114953.58 |
assembly | $8.215 per unit | 54000 x $8.215 = $443610 | 66000 x $8.215 = $542190 |
inspecting and finishing | $10.01 per finishing hour | 54000 x 0.20 x $10.013 = $108140.4 | 66000 x 0.30 x $10.013 = $198257.4 |
packaging | $5.52 per packaging hour | 54000 x 0.10 x $5.516 = $29786.4 | 66000 x 0.15 x $5.516 = $54608.4 |
total | $810983.43 | $1306009.38 | |
unit cost | $810983.43/54000 = $15.018 per unit | $1306009.38/66000 = $19.788 per unit |
thank you
EyeGuard Equipment Inc. (EEI) manufactures protective eyewear for use in commercial and home applications. The product...
EyeGuard Equipment Inc. (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines-the highest-quality product is called Safe-T, and a low-cost, value version is called Safe-V. Information on the factory conversion costs for Eel is as follows: Salaries Supplies Factory expense Factory Costs $ 859,000 159,000 559,000 $ 1,577,000 EEl uses ABC to determine the unit costs of...
EyeGuard Equipment Inc. (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines—the highest-quality product is called Safe-T, and a low-cost, value version is called Safe-V. Information on the factory conversion costs for EEI is as follows: Factory Costs Salaries $ 851,000 Supplies 151,000 Factory expense 551,000 $ 1,553,000 EEI uses ABC to determine the unit costs of...
EyeGuard Equipment Inc. (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines—the highest-quality product is called Safe-T, and a low-cost, value version is called Safe-V. Information on the factory conversion costs for EEI is as follows: Factory Costs Salaries $ 855,000 Supplies 155,000 Factory expense 555,000 $ 1,565,000 EEI uses ABC to determine the unit costs of...
EyeGuard Equipment Inc. (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines—the highest-quality product is called Safe-T, and a low-cost, value version is called Safe-V. Information on the factory conversion costs for EEI is as follows: Salaries Supplies Factory expense Factory Costs $ 852,000 152,000 552,000 $ 1,556,000 EEl uses ABC to determine the unit costs of...
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