Hello, I am working on the accounting assignment below. I would be very grateful
ID: 2407144 • Letter: H
Question
Hello, I am working on the accounting assignment below. I would be very grateful for any help on solving this assignment below.
Activities
Cost Drivers
Total Cost
$33,495
26,235
23,400
$83,130
Cost Drivers
Instruments
Gauges
Total
Overhead Rate
Instruments
Gauges
Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 52 range instruments and 303 pressure gauges were produced, and overhead costs of $83,130 were estimated. An analysis of estimated overhead costs reveals the following activities.Activities
Cost Drivers
Total Cost
1. Materials handling Number of requisitions$33,495
2. Machine setups Number of setups26,235
3. Quality inspections Number of inspections23,400
$83,130
The cost driver volume for each product was as follows.
Cost Drivers
Instruments
Gauges
Total
Number of requisitions 380 635 1,015 Number of setups 180 315 495 Number of inspections 265 255 520Explanation / Answer
Step 1: Calculation of the Cost Driver Rate Cost Driver Rate = Activity Cost / Cost Driver Activity Cost Driver Activity Cost / Cost Driver = "/" Cost Driver " = " To Cost Driver Rate Material Handling No. of Requisition 33,495 "/" 1,015 " = " To 33.00 Machine Setups No. of Set-ups 26,235 "/" 495 " = " To 53.00 Quality inspection No. of inspections 23,400 "/" 520 " = " To 45.00 83,130 Step 2: Calculation of the Cost Driver Rate Per Unit Per Product Activity Product Cost Driver Used "X " By Cost Driver Rate " = " To Activity Cost as per Service Department Material Handling No. of Requisition Instruments 380 "X " By $ 33 " = " To $ 12,540 Gauges 635 "X " By $ 33 " = " To $ 20,955 Machine Setups No. of Set-ups Instruments 180 "X " By $ 53 " = " To $ 9,540 Gauges 315 "X " By $ 53 " = " To $ 16,695 Quality inspection No. of inspections Instruments 265 "X " By $ 45 " = " To $ 11,925 Gauges 255 "X " By $ 45 " = " To $ 11,475 STEP 3 : - Calculation of the Revenue Divisional Income Statement For the year Ended June 30, 2014 Instruments Gauges Total Material Handling $ 12,540 $ 20,955 $ 33,495 Machine Setups $ 9,540 $ 16,695 $ 26,235 Quality inspection $ 11,925 $ 11,475 $ 23,400 Total Cost $ 34,005 $ 49,125 $ 83,130 Divide By "/" By "/" By Number of Units 52 303 Overhead Cost per unit $ 653.94 $ 162.13 Answer = Instruments Gauges Total Cost = $ 34,005 $ 49,125 Overhead Cost per unit $ 653.94 $ 162.13
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