Question 4 (12 marks) (24 minutes) Alanis Mor is set to analyze her costs for th

Question

Question 4 (12 marks) (24 minutes) Alanis Mor is set to analyze her costs for the year. She is the accountant inc product costing. She has recently received calls from the marketingdesed prices about the accuracy of product costing, because the company has r one of their product the without any response from competitors. Simnagement product has been under severe price competition by competitors and rnduct position. wondering if they can maintain their leadership role with re Alanis, gathered the following information to help in her analysis. enquiring competitors. Similarly, their other is Total manufacturing overhead for the year was budgeted overhead is charged on the basis of machine hours. The compa products per year. only manufactures two JA21 $17.25 Xzi4 $15.50 30,000 25,000 700 60,000 Direct Costs Machine hours worked 120,000 25,000 300 Machine set-ups Units produced 200,000 Required.: Compute the unit cost of xz14 and JA21, using the current cost allocation method. (4 marks) PR 52 a) b) Alanis decided to look into the activiry based costing she heard about at a conference. Upon analysis, the following additional information was acquired: Manufacturing overhead consisted of the following cost pools: Dollar Value Item or Category Machine Related Costs Labour Related Costs Machine Setups Total Cost Driver Machine Hours Direct Labour Hours Machine Setups $1,650,000 $2,550,000 $1,325,000 S5,525,000 Compute the unit cost of XZ14 and JA21, using activity based costing. (8 marks)

Explanation / Answer

Req A: Pre-determined overhead rate based on mahine hours: Estimated Overheads/ Estimated MH ($ 5525,000 /150,000) = $36.83 per MH Overheads allocated XZ14 JA 21 machine hours 30000 120000 Overhead rate 36.83 36.83 Overhead applied 1104900 4419600 Divide: Number of Units 60000 200,000 Overhead cost per unit 18.415 22.098 UNIT COST XZ 14 JA 21 Direct cost 15.5 17.25 Add: OH Cost per unit 18.42 22.1 Unit cost 33.92 39.35 Req B: STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Machine related MH 1,650,000 150,000 11 per MH labour related DLH 2,550,000 50,000 51 per LH machine setups Setups 1,325,000 1,000 1,325 per Setup XZ 14 JA 21 Activity rate Activity Amount Activity Amount Machine Related 11 30000 330000 120000 1320000 Labour related 51 25000 1275000 25000 1275000 Machine setup 1325 700 927500 300 397500 Total Overheads 2532500 2,992,500 Divide number of units 60000 200000 OH per unt 42.20833 14.9625 Units cost XZ 14 JA 21 Direct cost 15.5 17.25 Add: OH Cost per unit 42.21 14.96 Unit cost 57.71 32.21

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

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