Managerial Accounting 6
hemciaColumbus Foundry, a large manufacturer of heavy equipment components, has determined the following activity cost pools and cost driver levels for the year:
| Activity Cost Pool | Activity Cost | Activity Cost Driver | |
|---|---|---|---|
| Machine setup | $ 600,000 | 12,000 | setup hours |
| Material handling | 120,000 | 2,000 | tons of materials |
| Machine operation | 500,000 | 10,000 | machine hours |
The following data are for the production of single batches of two products, C23 Cams and U2 Shafts:
| C23 Cams | U2 Shafts | |
|---|---|---|
| Units produced | 500 | 300 |
| Machine hours | 4 | 5 |
| Direct labor hours | 200 | 400 |
| Direct labor cost | $ 5,000 | $ 10,000 |
| Direct materials cost | $ 30,000 | $ 20,000 |
| Tons of materials | 12.5 | 8 |
| Setup hours | 3 | 7 |
Determine the unit costs of C23 Cams and U2 Shafts using ABC.
C23 Cams
$
U2 Shafts
$
Meridian Company has determined its activity cost pools and cost drivers to be the following:
| Cost pools | |
|---|---|
| Setup | $35,000 |
| Material handling | 6,400 |
| Machine operation | 240,000 |
| Packing | 84,000 |
| Total indirect manufacturing costs | $365,400 |
| Cost drivers | |
|---|---|
| Setups | 350 |
| Material moves | 640 |
| Machine hours | 20,000 |
| Packing orders | 1,200 |
One product made by Meridian, metal casements, used the following activities during the period to produce 500 units:
| Setups | 20 |
| Material moves | 80 |
| Machine hours | 1,900 |
| Packing orders | 150 |
(a) Calculate the cost per unit of activity for each activity cost pool.
Setup
$
Material move
$
Material operation
$
Packing
$
(b) Calculate the manufacturing overhead cost per metal casement manufactured during the period.
$
Assume that manufacturing overhead for Goldratt Company consisted of the following activities and costs:
| Setup (1,000 setup hours) | $136,000 |
| Production scheduling (400 batches) | 70,000 |
| Production engineering (60 change orders) | 60,000 |
| Supervision (2,000 direct labor hours) | 60,000 |
| Machine maintenance (12,000 machine hours) | 108,000 |
| Total activity costs | $434,000 |
The following additional data were provided for Job 845:
| Direct materials costs | $7,000 |
| Direct labor cost (5 Milling direct labor hours; 35 Finishing direct labor hours) | $1,000 |
| Setup hours | 5 hours |
| Production scheduling | 1 batch |
| Machine hours used (25 Milling machine hours; 5 Finishing machine hours) | 30 hours |
| Production engineering | 3 change orders |
(a) Calculate the cost per unit of activity driver for each activity cost category.
Setup
$
Production scheduling
$
Production engineering
$
Supervision
$
Machine maintenance
$
(b) Calculate the cost of Job 845 using ABC to assign the overhead costs.
$
(c) Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours.
$
11 years ago
15
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