looking to attain the highest grade possible, please verify if this is correct.

Question

looking to attain the highest grade possible, please verify if this is correct. IF I am missing any calcuations, please include.

Thank you,

Question 1 (10 Marks) Hot Potato Company manufactures two products, Product 2 and Product 8. Product 8 is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product 2. Product 8 is the more complex of the two products, requiring two hours of direct labour time per unit to manufacture compared to one hour of direct labour time for Product 2. Product 8 is produced on an automated production line.

Overhead is currently assigned to the products on the basis of direct labour-hours. The company estimated it would incur a total of $450,000 in manufacturing overhead costs and produce 7,500 units of Product 8 and 30,000 units of Product 2 during the current year. Unit costs for materials and direct labour are: Product 2 Product 8 Direct Labour 10 20 Direct Material 12 25 Required: a. Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year. (5 marks) Product 2 product 8 total Direct labour hr/unit 1 2 units to be made 30,000 7,500 total direct labour hours 30,000 15,000 45,000 overhead cost 450,000 Total direct labour hours 45,000 overhead rate /labour Hr 10 Product 2 Product 8 Direct materials 12 25 direct labour 10 20 overhead cost 10 20 total unit cost 32 65 b. The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: (5 marks) Activity Costs Pools Expected Activity Machine set-ups required Estimated Overhead Costs Product 2 Product 8 Total Activity Rate Purchase orders issued $180,000 600 1,200 1,800 100 Machine-hours required 38,382 500 100 600 63.97 Maintenance requests issued 92,650 6,800 10,200 17,000 5.45 138,968 693 907 1,600 86.86 $450,000 Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year. Activity Costs Pools Product 2 Product 8 Total Machine setup 60,000 120,000 180,000 (Activity Rate * Used by Product) Purchase orders 31,985 6,397 38,382 Machine hours 37,060 55,590 92,650 maintenance requests 60,191 78,777 138,968 (Overhead Rate*DLH PU) over head costs 189,236 260,764 450,000 units to be made 30,000 7,500 overhead cost/ unit 6.31. 34.77, Unit product Costs Product 2 Product 8 direct material 12 25 Direct labour 10 20 Overhead cost 6.31 34.77 Total unit prodcut costs 28.31 79.77

Explanation / Answer

Yes. The answer you provided is correct in every aspect and there is no need to includ anything.

I did this question myself without seeing the answer you provided and i got the same answers too. So, Please go ahead with this answer!!!!!!!!!

Hope you get the grade you desired!!!

Thank you!!!!!

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.