For different kinds of clocks At the beginning of the year, the following estima

Question

For different kinds of clocks At the beginning of the year, the following estimates of cost and activity for five activity cost pool: Activity Cost pool. Activity measure. Expected overhead cost. Expected activity Labor related Direct labor hours $156,000 26,000 DLH's Purchase orders number of orders $11,000 220 orders parts management # of part types $80,000 100 part types Clock face etching Number of units $90,000 20,000 clocks general factory Machine hours $180,000 20,000 machine hours Expected activity for the year was distributed among the company's 4 products: Expected activity Activity cost pool (driver) Sundials Wall Standing Grandfathers Labor related (DLH's) 6,000 11,000 4,000 5,000 Purchase orders (orders) 60 30 40 90 Parts mgmt. (part types) 30 15 40 15 Clock face etching (units) 5,000 8,000 6,000 1,000 General factory (MH's) 3,000 8,000 3,000 6,000 Direct labor cost 90,000 165,000 60,000 75,000 Direct material cots 127,500 202,400 55,200 103,500 1. What is the overhead per unit for each product under both the traditional and ABC systems? (sundials, wall, standing, grandfathers), Also, what is the overall overhead 2. What is the total product cost per unit (overhead and direct costs) under the 2 costing methods for each product?

Explanation / Answer

1. Calculate the cost per driver: Labor related / Direct labor-hours / $156,000 /26,000 DLHs = $6/dlh Purchase orders /Number of orders / $11,000 /220 orders = $50/order Parts management / Number of part types / $80,000 / 100 part types = $800 /part type Board etching /Number of boards / $90,000 / 2,000 boards = $45/board General factory / Machine-hours / $180,000 / 20,000 HMs = $9/Mhr ================================================ actual activity for each product Activity Cost Pool ----- Product A.....Product B.....Product C.....Product D Labor related (DLHs) @6 36,000.....60,000.....24,000.....30,000 Purchase orders @$50 -----3,000..... 1,500.......1,000 .....4,500 Part management @$100 ..3,000 ..... 2,500..... 4,000..... 1,500 Board etching @45/...........22,500.....40,500....18,0

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