Question

Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead. Mobile Safes Walk-in Safes Units planned for production 200 Material moves per product line 200 Purchase orders per product line 350 Direct labor hours per product line 800 1,700 Your answer is correct. The total estimated manufacturing overhead was $264,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, eg. 12.25.) 422.4 per unit (1) One mobile safe $ (2) One walk-in safe $ 3590.4 per unit e Textbook and Media Attempts: 2 of 7 used (61) x Your answer is incorrect. The total estimated manufacturing overhead of $264,000 was comprised of $164,000 for materials handling costs and $100,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, e.g. 12.25.) What amount of materials handling costs are assigned to: (a) One mobile safe (b) One walk-in safe $ $ 773.25 per unit 2187 per unit e Textbook and Media Save for Later Attempts: 2 of 7 used Submit Answer

Answer 1

b1)
		Total Overheads	Total Activity		Rate Per Activity
	Materials Handling	$         1,64,000	$                          500	Material Moves	$                       328	per move
	Material handling cost assigned to Mobile safes and Walk-in safe
	Mobile Safe
	Activity	Number of activites		rate per activity	overhead assigned
	a	b		c	d=b*c
	Materials Handling	300	Material Moves	$                    328	$                 98,400
	Per unit cost = $98400/200 units
	=$492 per unit
	Walk in safe
	Activity	Number of activities		rate per activity	overhead assigned
	a	b		c	d=b*c
	Materials Handling	200	Material Moves	$                    328	$                 65,600
	Per unit cost = $65600/50 units
	=$1312 per unit
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