The EyeGuard Equipment Inc. (EE) manufactures protective eyewear for use in comm
ID: 2332897 • Letter: T
Question
The EyeGuard Equipment Inc. (EE) manufactures protective eyewear for use in commercial and home applications. product is also used by hunters. home woodworking hobbyists, and in other applications. The firm has two main product lines the highest-quality product is called Safe-T and a low-cost, value version is called Safe v Information on the factory conversion costs for EEI is as follows Salaries Supplies Factory expense S848,886 148,800 548,808 $ 1,544,808 EEI uses ABC to determine the unit costs of its products. The firm uses resource consumption cost drivers based on rough estimates of the amount that each activity consumes, as shown below. EEI has four activities: job setup. assembly, inspecting and finishing, and packaging. Salaries Supplies Factory expense Inspecting and Finishing 25% 30 3e PackagingTotal 100% 188 100 1ei 15 58% 15% 78 The activity cost drivers for the two products are summarized below. Setup Assembly Inspect and finishing Packaging Batch Units Finishing hours Packing hours Batches Units Fanishing hours. per unst 238 S88 58, eee,88 8.48 .4eExplanation / Answer
Answers
Salaries Allocation: $ 848,000
[A]
[B = $ 848,000 x A]
Setup
10%
$ 84,800.00
Assembly
50%
$ 424,000.00
Inspecting & Finishing
25%
$ 212,000.00
Packaging
15%
$ 127,200.00
TOTAL
100%
$ 848,000.00
Supplies Allocation; $ 148,000
[A]
[B = $ 148,000 x A]
Setup
15%
$ 22,200.00
Assembly
55%
$ 81,400.00
Inspecting & Finishing
30%
$ 44,400.00
Packaging
0%
$ -
TOTAL
100%
$ 148,000.00
Factory Expense: $ 548,000
[A]
[B = $ 548,000 x A]
Setup
0%
$ -
Assembly
70%
$ 383,600.00
Inspecting & Finishing
30%
$ 164,400.00
Packaging
0%
$ -
TOTAL
100%
$ 548,000.00
Factory Cost
Setup
Assembly
Inspecting & Finishing
Packaging
Salaries
$ 848,000.00
$ 84,800.00
$ 424,000.00
$ 212,000.00
$ 127,200.00
Supplies
$ 148,000.00
$ 22,200.00
$ 81,400.00
$ 44,400.00
$ -
Factory Expenses
$ 548,000.00
$ -
$ 383,600.00
$ 164,400.00
$ -
TOTAL
$ 1,544,000.00
$ 107,000.00
$ 889,000.00
$ 420,800.00
$ 127,200.00
Safe V
Safet T
Total
Batches
230
580
810
Units
58,000
70,000
128,000
Finishing hours
23,200
28,000
51,200
Packaging hours
17,400
14,000
31,400
Cost [see Requirement 1]
[Calculated above in working]
[Cost x rate] = ANSWER
Setup
$ 107,000.00
$ 810.00
$ 132.10
Assembly
$ 889,000.00
$ 128,000.00
$ 6.95
Inspecting & Finishing
$ 420,800.00
$ 51,200.00
$ 8.22
Packaging
$ 127,200.00
$ 31,400.00
$ 4.05
Activity Rates
Safe V
Safe T
[A =calculated in Req 2]
[B= no. of cost drivers]
[C = A x B]
[D= no. of cost drivers]
[E= A x D]
Setup
$ 132.10
230
$ 30,383.00
580
$ 76,618.00
Assembly
$ 6.95
58,000
$ 403,100.00
70,000
$ 486,500.00
Inspecting & Finishing
$ 8.22
23,200
$ 190,704.00
28,000
$ 230,160.00
Packaging
$ 4.05
17,400
$ 70,470.00
14,000
$ 56,700.00
Total Overhead allocated
$ 694,657.00
Total Overhead allocated
$ 849,978.00
Total Units
58,000
70,000
Activity Based cost per unit
$ 11.98 [ANSWER]
$ 12.14 [ANSWER]
Salaries Allocation: $ 848,000
[A]
[B = $ 848,000 x A]
Setup
10%
$ 84,800.00
Assembly
50%
$ 424,000.00
Inspecting & Finishing
25%
$ 212,000.00
Packaging
15%
$ 127,200.00
TOTAL
100%
$ 848,000.00
Supplies Allocation; $ 148,000
[A]
[B = $ 148,000 x A]
Setup
15%
$ 22,200.00
Assembly
55%
$ 81,400.00
Inspecting & Finishing
30%
$ 44,400.00
Packaging
0%
$ -
TOTAL
100%
$ 148,000.00
Factory Expense: $ 548,000
[A]
[B = $ 548,000 x A]
Setup
0%
$ -
Assembly
70%
$ 383,600.00
Inspecting & Finishing
30%
$ 164,400.00
Packaging
0%
$ -
TOTAL
100%
$ 548,000.00
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