Question

Part 2 of 2 Required information Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. 33 v-1 10,000 $ 2 pints Units produced Direct materials cost per unit Machine hours per unit Production runs per month V-2 1,000 $ 4 2 40 1 80 eBook Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Print Machine depreciation Setup labor Material handling Total $54,000 25,200 15,840 References $ 95,040 Required: a. Compute the unit costs for the two products V-1 and V-2 using the current costing system at Upriver (using machine hours as the allocation basis). (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Compute the unit costs for the two products V-1 and V-2 using the proposed ABC system at Upriver. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Unit Cost V2 - V1 a. b. Using current costing system Using proposed ABC system

Answer 1

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Upriver Parts
Answer a
Calculation of Predetermined OH Rate	V-1	V-2	Total
Units produced	10,000.00	1,000.00		A
Machine Hour Per unit	1.00	2.00		B
Calculation of Total Machine Hours	10,000.00	2,000.00	12,000.00	C=A*B
Total Manufacturing overhead			95,040.00	D
Predetermined OH Rate			7.92	E=C/D
Allocated OH per unit	7.92	15.84		F=E*B
Product cost- Current Costing System	V-1	V-2
Direct Materials	2.00	4.00
Allocated OH per unit	7.92	15.84		See F
Product cost	9.92	19.84
Calculation of ABC rates for overhead		G	H	I	J=H+I	K=G/J
			Activity usage			ABC rates
Activity cost pool	Activity Measure	Cost	V-1	V-2	Total
Material Depreciation	Total Machine Hours	54,000.00	10,000.00	2,000.00	12,000.00	4.50
Set Up labor	Total Production runs	25,200.00	80.00	40.00	120.00	210.00
Material Handling	Number of units	15,840.00	10,000.00	1,000.00	11,000.00	1.44
Total Cost assigned		95,040.00
		See K	See H	L=K*H	See I	M=K*I
Allocation table			V-1		V-2
Activity cost pool	Activity Measure	ABC Rates	Activity used	Cost assigned	Activity used	Cost assigned
Material Depreciation	Total Machine Hours	4.50	10,000.00	45,000.00	2,000.00	9,000.00
Set Up labor	Total Production runs	210.00	80.00	16,800.00	40.00	8,400.00
Material Handling	Number of units	1.44	10,000.00	14,400.00	1,000.00	1,440.00
Total Cost assigned				76,200.00		18,840.00
Units produced				10,000.00		1,000.00
Costs per unit				7.62		18.84
Product cost- ABC System	V-1	V-2
Direct Materials	2.00	4.00
Allocated OH per unit	7.62	18.84	See O
Product cost	9.62	22.84