ACCT 212 Connect Homework 4 Activity Based Costing Assignment solutions complete answers

ACCT 212 Connect Homework 4 Activity Based Costing Assignment solutions complete answers 

 

Tent Master produces Pup tents and Pop-up tents. The company budgets $300,000 of overhead cost and 50,000 direct labor hours. Additional information follows.

1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 50,000 direct labor hours.
2. Pup tents use 3 direct labor hours (DLH) per unit and Pop-up tents use 2 direct labor hours per unit. Compute the overhead cost per unit for each product.
3. Compute the product cost per unit for each product.
4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).

 

Textra produces parts for a machine manufacturer. Parts go through two departments, Molding and Trimming. The company budgets overhead cost of $260,000 in the Molding department and $220,000 in the Trimming department. The company budgets 16,000 machine hours (MH) in Molding and 25,000 direct labor hours (DLH) in Trimming. Actual production information follows.

 

Hydro Sports budgets overhead cost of $826,000 for the year; of this amount, $490,000 is traceable to the Assembly department and $336,000 is traceable to the Finishing department. The company manufactures two types of jet skis: standard and deluxe. Budgeted direct labor hours for the standard model are 6 in Assembly and 1 in Finishing. Budgeted direct labor hours for the deluxe model are 8 in Assembly and 2 in Finishing. The company budgets production of 280 units of the standard model and 280 units of the deluxe model for the year.
   
1. Compute each department’s total number of budgeted direct labor hours for the year.
2. Compute departmental overhead rates for each department using direct labor hours for that department.
3. Compute overhead cost per unit for each model using departmental overhead rates. Actual direct labor hours for the standard model are 6 in Assembly and 1 in Finishing. Actual direct labor hours for the deluxe model are 8 in Assembly and 2 in Finishing.

 

Health Cooperative is an outpatient surgical clinic. It budgets $603,900 of overhead cost for the year. The two main surgical units and their data follow.
 

Service
Budgeted Surgeries
General surgery
430
Orthopedic surgery
230
 
1. Compute a single plantwide rate, assuming the company allocates overhead cost based on 660 budgeted surgeries.
2. In May of this year, the company performed 23 general surgeries and 17 orthopedic surgeries. Allocate overhead to each of the two types of surgeries for May using the single plantwide overhead rate.

 

Shakti Company budgets overhead cost of $63,000 for the year. The company reports the following for its standard and deluxe models.
 

Cost per Unit
Standard
Deluxe
Direct materials
$ 15
$ 26
Direct labor
21
30
 
1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 6,300 direct labor hours.
2. The standard model uses 2 direct labor hours per unit and the deluxe model uses 3 direct labor hours per unit. Compute overhead cost per unit for each model.
3. Compute the total product cost per unit for both models.

 

Shakti Company budgets overhead cost of $64,000 for the year. The company reports the following for its standard and deluxe models.
 

Cost per Unit
Standard
Deluxe
Direct materials
$ 12
$ 23
Direct labor
18
27
 
1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 6,400 direct labor hours.
2. The standard model uses 3 direct labor hours per unit and the deluxe model uses 4 direct labor hours per unit. Compute overhead cost per unit for each model.
3. Compute the total product cost per unit for both models.

 

Health Cooperative is an outpatient surgical clinic. It budgets $691,900 of overhead cost for the year. The two main surgical units and their data follow.
 

Service
Budgeted Surgeries
General surgery
470
Orthopedic surgery
270
 
1. Compute a single plantwide rate, assuming the company allocates overhead cost based on 740 budgeted surgeries.
2. In May of this year, the company performed 27 general surgeries and 21 orthopedic surgeries. Allocate overhead to each of the two types of surgeries for May using the single plantwide overhead rate.

 

Wess Company has limited capacity and can produce either its standard product or its deluxe product. Additional information follows.
 

Per Unit
Standard
Deluxe
Selling price
$ 100
$ 134
Direct materials
50
55
Direct labor
40
45

1. Using a single plantwide rate, the company computes overhead cost per unit of $18 for the standard model and $23 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price to get gross profit per unit.
2. Using activity-based costing, the company computes overhead cost per unit of $2 for the standard model and $45 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price per unit to get gross profit per unit.

 

Hydro Sports budgets overhead cost of $793,500 for the year; of this amount, $586,500 is traceable to the Assembly department and $207,000 is traceable to the Finishing department. The company manufactures two types of jet skis: standard and deluxe. Budgeted direct labor hours for the standard model are 7 in Assembly and 1 in Finishing. Budgeted direct labor hours for the deluxe model are 10 in Assembly and 2 in Finishing. The company budgets production of 230 units of the standard model and 230 units of the deluxe model for the year.
   
1. Compute each department’s total number of budgeted direct labor hours for the year.
2. Compute departmental overhead rates for each department using direct labor hours for that department.
3. Compute overhead cost per unit for each model using departmental overhead rates. Actual direct labor hours for the standard model are 7 in Assembly and 1 in Finishing. Actual direct labor hours for the deluxe model are 10 in Assembly and 2 in Finishing.

 

Textra produces parts for a machine manufacturer. Parts go through two departments, Molding and Trimming. The company budgets overhead cost of $263,750 in the Molding department and $223,750 in the Trimming department. The company budgets 16,000 machine hours (MH) in Molding and 25,000 direct labor hours (DLH) in Trimming. Actual production information follows.
 

 
Number of Units
Molding Department
Trimming Department
Hours per Unit
Total Hours
Hours per Unit
Total Hours
Part Z
3,000
2.0
MH per unit
6,000
MH
3
DLH per unit
9,000
DLH
Part X
4,000
2.5
MH per unit
10,000
MH
4
DLH per unit
16,000
DLH
Totals
 
 
 
16,000
MH
 
 
25,000
DLH
Required:
1. Compute the plantwide overhead rate using direct labor hours as the allocation base.
2. Determine the overhead cost per unit for each part using the plantwide rate.

 

Required:
1. Compute a departmental overhead rate for the Molding department based on machine hours and a departmental overhead rate for the Trimming department based on direct labor hours.
2. Determine the overhead cost per unit for each part using the departmental rates.

 

Consider the following data for two products of Vigano Manufacturing.
 

Activity
Budgeted Cost
Activity Driver
Machine setup
$ 13,000
(20 machine setups)
Parts handling
10,400
(16,000 parts)
Quality inspections
15,600
(100 inspections)
Total budgeted overhead
$ 39,000
 
 

Unit Information
Product A
Product B
Units produced
1,300
units
260
units
Direct materials cost
$ 23
per unit
$ 33
per unit
Direct labor cost
$ 43
per unit
$ 53
per unit
Direct labor hours
2
per unit
2.50
per unit

1. Using a plantwide overhead rate based on 3,250 direct labor hours, compute the total product cost per unit for each product.
2. Consider the following additional information about these two products. If activity-based costing is used to allocate overhead cost, (a) compute overhead activity rates, (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and (c) compute product cost per unit for each.
 

Actual Activity Usage
Product A
Product B
Setups
8
setups
12
setups
Parts
10,000
parts
6,000
parts
Inspections
40
inspections
60
inspections
 

Pro-Craft Company computed the following activity rates to allocate overhead cost for the year.
 

Activity
Activity Rate
Materials handling
$ 57
per materials requisition
Quality inspection
$ 47
per inspection
Utilities
$ 6
per machine hour

During January, the company produced the following two jobs. Allocate overhead cost to each job using the activity rates.
 

Activity Cost Driver
Activity Usage
Job A
Job B
Materials requisitions
5
3
Inspections
8
4
Machine hours
335
235
 

Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow.
  

Process
Activity
Budgeted Cost
Activity Cost Driver
Budgeted Activity Usage
Assembly
Machining
$ 310,200
Machine hours (MH)
7,600
 
Setups
20,000
Setups
180
 
 
$ 330,200
 
 
Finishing
Inspecting
$ 232,000
Inspections
860
Support
Purchasing
$ 136,000
Purchase orders
510
 
Additional production information concerning its two models follows.
 

Units and Activities
Model X
Model Z
Units produced
1,400
2,800
Machine hours
2,000
5,600
Setups
60
120
Inspections
540
320
Purchase orders
340
170
 

Per Unit
Model X
Model Z
Selling price per unit
$ 405
$ 385
Direct materials cost per unit
155
100
Direct labor cost per unit
135
155

1. Compute the activity rate for each activity using activity-based costing.
2. Using activity-based costing, compute the overhead cost per unit for each model.
3. Compute the total product cost per unit for each model.
4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).

 

Craftmore Machining reports the following budgeted overhead cost and related data for this year.
 

Activity
Budgeted Cost
Activity Cost Driver
Budgeted Activity Usage
Assembly
$ 585,000
Direct labor hours (DLH)
13,000
Product design
90,000
Engineering hours (EH)
1,500
Electricity
30,000
Machine hours (MH)
10,000
Setup
75,000
Setups
600
Total
$ 780,000
 
 


Required:
1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 13,000 direct labor hours.
2. Job 31 used 400 direct labor hours and Job 42 used 690 direct labor hours. Allocate overhead cost to each job using the single plantwide overhead rate from part 1.
3. Compute an activity rate for each activity using activity-based costing.
4. Allocate overhead costs to Job 31 and Job 42 using activity-based costing.
 

Activity Cost Driver
Activity Usage
Job 31
Job 42
Direct labor hours (DLH)
400
690
Engineering hours (EH)
46
52
Machine hours (MH)
40
70
Setups
5
7
 

Tent Master produces Pup tents and Pop-up tents. The company budgets $288,000 of overhead cost and 48,000 direct labor hours. Additional information follows.
 

Per Unit
Selling Price
Direct Materials
Direct Labor
Pup tent
$ 84
$ 22
$ 47
Pop-up tent
79
23
29
 

Required:
1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 48,000 direct labor hours.
2. Pup tents use 4 direct labor hours (DLH) per unit and Pop-up tents use 3 direct labor hours per unit. Compute the overhead cost per unit for each product.
3. Compute the product cost per unit for each product.
4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).

 

Activity
Budgeted Cost
Activity Cost Driver
Budgeted Activity Usage
Assembly
$ 192,000
Direct labor hours (DLH)
48,000
Electricity
30,000
Machine hours (MH)
10,000
Materials purchasing
66,000
Purchase orders (PO)
500
Total
$ 288,000
 
 

Required:
1. Compute an activity rate for each activity using activity-based costing.
2. The following actual activity usage produced 10,000 Pup tents and 5,000 Pop-up tents. Allocate overhead cost to Pup tents and to Pop-up tents and compute overhead cost per unit for each product.
 

Activity Cost Driver
Activity Usage
Pup tents
Pop-up tents
Direct labor hours(DLH)
33,000
15,000
Machine hours (MH)
3,500
6,500
Purchase orders(PO)
150
350

3. Compute product cost per unit for Pup tents and for Pop-up tents.
4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit).

 

Bike-O-Rama produces two bike models: Voltage and EasyRider. Departmental overhead data follow.
 

Department
Budgeted Cost
Allocation Base
Budgeted Usage
Fabricating
$ 131,600
Machine hours (MH)
9,400
MH
Assembly
159,500
Direct labor hours (DLH)
2,900
DLH

Required:
1. Compute departmental overhead rates using (a) machine hours to allocate budgeted Fabricating costs and (b) direct labor hours to allocate budgeted Assembly costs.
2. The company reports the following actual production usage data. Compute the overhead cost per unit for each model.
 

 
Voltage
EasyRider
Machine hours per unit
2.0
MH
3.0
MH
Direct labor hours per unit
1.4
DLH
0.6
DLH

3. The company reports additional information below. For each model, compute the product cost per unit.
 

Per Unit
Selling Price
Direct Materials
Direct Labor
Voltage
$ 274
$ 104
$ 40
EasyRider
180
94
16

4. For each model, compute gross profit per unit (selling price per unit minus product cost per unit).

 

Optimal Health is an outpatient surgical clinic. The clinic’s three activities, their overhead cost, and their cost drivers follow.
 

Activity
Budgeted Cost
Activity Cost Driver
Budgeted Activity Usage
Supplies
$ 2,394,000
Surgical hours (SH)
14,000
Patient services
56,000
Number of patients
800
Building cost
378,000
Square feet
2,700
 
The two main surgical units and their actual activity usage follow.
     

Service
Actual Activity Usage
Surgical Hours
Patients
Square Feet
General surgery
3,200
600  
750
Orthopedic surgery
10,800
200  
1,950
 
Required:
1. Compute activity rates using activity-based costing.
2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery unit.