claire_company_produces_tablets_and.docx
Question: Problem 7-20 Claire Company produces Tablets and B...
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Problem 7-20 Claire Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.
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Activity Pool
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Department Costs Cost Driver
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Binding
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$247,500
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Number of units
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Printing
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796,250
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Machine hours
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Product design
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195,000
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Change orders
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General
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606,250
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None
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Total overhead costs
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$1,845,000
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Other information is as follows:
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Tablets
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Books
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Units
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62,500
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20,000
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Direct materials cost per unit
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$3.00
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$10.00
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Direct labor cost per unit
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$4.00
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$8.00
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Direct labor hours
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25,000
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16,000
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Machine hours
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125,000
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120,000
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Change orders
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1,250
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2,000
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Calculate predetermined OH rate. (Round answer to 2 decimal places, e.g. 15.25.)
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Predetermined OH rate
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$ /DLH
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Determine the unit product cost for Tablets and Books using the traditional costing system. (Round overhead rate and final answers to 2 decmial places, e.g. 15.25.)
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Tablets
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Books
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Unit product cost
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$
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$
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Calculate ABC rates. (Round answers to 2 decimal places, e.g. 15.25.)
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ABC rates
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Binding
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$ /unit
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Printing
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$ /machine hour
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Product design
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$ /change order
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Determine the unit product cost for Tablets and Books using the activity-based costing system. (Round all rates and final answers to 2 decmial places, e.g. 15.25.)
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Tablets
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Books
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Total unit cost
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$
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$
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Show that General cost is the difference between the total overhead costs allocated to products under the traditional system and the total cost allocated to products under the activity-based costing system.(Round answers to 0 decmial places, e.g. 1,525.)
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Traditional
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ABC
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Difference
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Total allocated overhead
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$
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$
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$
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