Product-Costing Accuracy, Consumption Ratios, Activity Rates, Activity Costing T
ID: 2418316 • Letter: P
Question
Product-Costing Accuracy, Consumption Ratios, Activity Rates, Activity Costing
Tristar Manufacturing produces two types of battery-operated toy soldiers: infantry and special forces. The soldiers are produced by using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows:
Required:
1. Calculate the total overhead assigned to each product by using only machine hours to calculate a plantwide rate. Round your interim rate calculation to two decimal places, if required.
2. Calculate consumption ratios for each activity. Round your answers to two decimal places.
3. Calculate a rate for each activity by using the associated driver. If required, round your answers to two decimal places.
4. Assign the overhead costs to each product by using the activity rates computed in Requirement 3.
5. Comment on the difference between the assigment in Requirement 1 and the activity based assigment.
THANK YOU SO MUCH, I REALLY APPRECIATE IT!!
Product Machine Hours Setups Receiving Orders Packing Orders Infantry 20,000 300 900 1,600 Special forces 20,000 100 100 1,800 Costs $80,000 $24,000 $18,000 $30,000Explanation / Answer
1. Calculation of the total overhead assigned to each product by using only machine hours Product Machinery costs Set up costs Receiving Orders costs Packing Orders costs Total Infantry $40,000 $12,000 $9,000 $15,000 $76,000 Special forces $40,000 $12,000 $9,000 $15,000 $76,000 2. Calculation of consumption ratios for each activity Product Machine Hours Setups Receiving Orders Packing Orders Infantry 50.00% 75.00% 90.00% 47.06% Special forces 50.00% 25.00% 10.00% 52.94% 3. Calculation of a rate for each activity by using the associated driver Machining $ 2 per machine hour Setups $ 60 per setup Receiving $ 18 per receiving order Packing $ 8.82 per packing order 4. Assign the overhead costs to each product by using the activity rates computed in Requirement 3. Infantry Special Forces Machining 20000 hours $40,000 20000 hours $40,000 Setups 300 set ups $18,000 100 set ups $6,000 Receiving 900 Receiving orders $16,200 100 Receiving orders $1,800 Packing 1600 Packing orders $14,118 1800 Packing orders $15,882 Total $ $88,318 $ $63,682 5 The difference is due to varaince in number of set ups, Receiving orders & Packing orders.
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