Activity Based Product Costing

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ManagerialAccoouting-Problem11-4A.xlsx
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Pr. 26(11)-4A

Problem 26(11)-4A
Name: 0
Section: # N-box Incorrects due to blanks COUNTIF(B15:AT24," ")
69
Score: 0% # N-box +B-box corrects COUNTIF(B15:AT24," ")
0
Key Code: [Key code here] Total SUM(AD13:AD15)
Instructions 69
Answers are entered in the cells with gray backgrounds. Percentage =(AD16-AD13-AD14)/AD16
Cells with non-gray backgrounds are protected and cannot be edited. 0%
An asterisk (*) will appear to the right of an incorrect entry. Notes:
If number-entry box is blank (this would be an incorrect answer for N-boxes), error check returns two spaces, " "
If number-entry or blank-entry box is incorrect, returns "*"
1. Production Setup Materials Handling Inspection Engineering If number-entry or blank-entry box is correct, returns single space, " "
Total activity cost Use data verification to set data entry to whole number >= 0, and use drop-downs for lables and names, so that students can't enter a space in a box and have it counted as correct.
Divided by total activity base mh setups no. parts insp. hours eng. hours Conditional formatting might be used but wasn't here, to hide some of the error check return symbols. If A1 = "~*", then font = red, if something else, then font = background color.
Activity rate /mh /setup /part /hour /hour
2. M5 Z4 I8
Activity Activity Activity Activity Activity Activity
Activity Activity Base Usage ´ Rate = Cost Activity Base Usage ´ Rate = Cost Activity Base Usage ´ Rate = Cost
Production mh mh mh
Setup setups setups setups
Material handling parts parts parts
Inspection insp. hours insp. hours insp. hours
Engineering eng. hours eng. hours eng. hours
Total
Number of units ¸ ¸ ¸
Activity cost per unit
3.
[Key essay answer here]

Sol

Problem 26(11)-4A
Name: Solution
Section:
Score: ON
Instructions
Answers are entered in the cells with gray backgrounds.
Cells with non-gray backgrounds are protected and cannot be edited.
An asterisk (*) will appear to the right of an incorrect entry. The essay answer will not be graded.
1. Production Setup Materials Handling Inspection Engineering
Total activity cost $ 264,000 $ 96,000 $ 9,600 $ 50,000 $ 150,000
Divided by total activity base 2,200 mh 400 setups 480 no. parts 1,000 insp. hours 500 eng. hours
Activity rate $ 120 /mh $ 240 /setup $ 20 /part $ 50 /hour $ 300 /hour
2. M5 Z4 I8
Activity Activity Activity Activity Activity Activity
Activity Activity Base Usage ´ Rate = Cost Activity Base Usage ´ Rate = Cost Activity Base Usage ´ Rate = Cost
Production 1,000 mh $120 $ 120,000 800 mh $120 $ 96,000 400 mh $120 $ 48,000
Setup 60 setups $240 14,400 120 setups $240 28,800 220 setups $240 52,800
Material handling 80 parts $20 1,600 150 parts $20 3,000 250 parts $20 5,000
Inspection 450 insp. hours $50 22,500 300 insp. hours $50 15,000 250 insp. hours $50 12,500
Engineering 125 eng. hours $300 37,500 175 eng. hours $300 52,500 200 eng. hours $300 60,000
Total $ 196,000 $ 195,300 $ 178,300
Number of units ¸ 1,250 ¸ 1,000 ¸ 500
Activity cost per unit $ 156.80 $ 195.30 $ 356.60
3.
The unit costs are different even though each product requires 0.8 machine hour because the products consume many activities in ratios different from the volume. For example, the I8 consumes setup, moving, shipping, and product engineering activities proportionately greater than its volume, while the M5 consumes the same activities proportionately less than its volume.