Question 1 Xander Company produces televisions. One of its plants produces two v

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Question 1

Xander Company produces televisions. One of its plants produces two versions of televisions: a basic model and a premium model. At the beginning of the year, the following data were prepared for the plant:

Additionally, the following overhead activity costs are reported:

Xander uses activity-based costing to calculate product cost.

Problem 7-3

Refer to Figure 7-6.

Required:

If required, round your answers to the nearest cent. When required, use rounded amounts in subsequent computations.

A. What is the plantwide overhead rate based on machine hours?
$ per machine hour

B. Assuming a plantwide overhead rate, what is the unit cost of the basic model?
$

C. Assuming a plantwide overhead rate, what is the unit cost of the premium model?
$

Question 2

Stinler Corporation manufactures curtains for retail stores and for individual customers. The retail chain buys 70% of the curtains produced. The individual customers purchase curtains in approximately equal quantities, where the orders are about the same size. Data concerning Stinler's customer activity are as follows:

Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.

Required:

A. Assign costs to customers by using an ABC approach.

B. Determine cost per unit sold for each type of customer. Round your answers to the nearest cent.

Basic Model Premium Model Expected Quantity 20,000         10,000               Selling Cost $90         $200               Prime Costs $40         $-80               Machine Hours 2,500         2,500               Number of requisitions 500         1,500               Maintenance hours 2,000         6,000               Number of setups 8         32              

Explanation / Answer

A plant overhead rate =419000/5000 83.8 B and C Basic Model Premium Model Expected Quantity 20000 10000 Selling Cost 1800000 2000000 Prime Costs 800000 800000 Overhead 209500 209500 TOTAL COST 1009500 1009500 cost per unit 50.475 100.95 A Retail Stores Individual Customers TOTAL Order filling costs allocated 9600 590400 600000 Sales force costs allocated 10000 390000 400000 B Retail Stores Individual Customers Manufacturing costs 8000000 3500000 overhead 10000 390000 TOTAL COST 8010000 3890000 cost per unit 143.04 162.08

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