Question

Save Homework: Chapter 5 HW Assignment Score: 0 of 1 pt E5-23 (similar to) 3 of 4 [0 complete HW Score: 0%, 0 of 4 pt Question Help Potvin Company produces mathematical and financial calculators and operates at capacity Data related to the twn products follows (Click the icon to view the data.) Total manufacturing overhead coets are: 33(Click the inon to vinw the anstrad costs. Requirements 1. Choose a cost driver for each overhead cast goal and calculate the manufacturing overhead cost per unit for each product. 2. Compute the manufacturing cost per unit for each product 3. How might Potvin's managers use the new cost information from its actity-based costing system to better manage its business? Requirement 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product Begin by choosing a cost driver for each overhead cost pool. Cost driver Rate 0 Data Table Activity Machining Set up Inspection 6 Data Table Mathematical Financial 25. DO 50.000 75,000 $ $ 25.000 $ Annual production in units Direct materials cost Direct manufacturing labor cost Direct manufacturing labor-hours Machine hours Number of production runs 150,000 50,000 2,500 70,000 Machining costs Setup costs Inspection costs Total 440,000 110,000 120,000 1.250 40.000 50 1,200 Print 800 Inspection hours Done Print Done

Answer 1

Activity Machining Set Up costs Inspection Costs Cost Drivers Machine Hours Number of production runs Inspection Hours Total Total Cost 4,40,000 1,10,000 1,20,000 6,70,000 Activity Mathematical Financial 40,000 70,000 50 50 1,200 800 Total 1,10,000 100 2,000 Allocation of Overheads Rate per Activity Mathematical Financial 1,60,000 2,80,000 1,100 55,000 55,000 60 72,000 48,000 2,87,000 3,83,000 2 Computation of Manufacturing Cost per Unit Particulars Mathematical Direct Materials 75,000 Manufacturing Labour Cost 25,000 Manufacturing Overhead 2,87,000 Total Manufacturing Cost 3,87,000 Actual Units produced 25,000 Cost per unit 15.48 Financial 1,50,000 50,000 3,83,000 5,83,000 50,000 11.66 3 New cost information helps the managers in taking decision based on the correct cost information.