Use the following data for problems #1 & #2: Belsky Corporation has provided the
ID: 2555334 • Letter: U
Question
Use the following data for problems #1 & #2:
Belsky Corporation has provided the following data from its activity-based costing system:
Activity Cost Pool
Total Cost
Total Activity
Assembly
$313,490
29,000
machine-hours
Processing orders
$49,476
1,400
orders
Inspection
$73,882
1,060
inspection-hours
1. Calculate an activity rate for each of Belsky’s three activities that it would use in the final stage of allocating costs to its products. (Hint: See Exhibit 7-7 on page 299 of the text for an example.)
2. Each year Belsky makes 490 units of its X-ray Machines requiring a total of 1,080 machine-hours, 60 orders, and 20 inspection-hours per year. In addition to the costs allocated through the activity pool, the product's direct materials cost is $46.42 per unit and its direct labor cost is $20.22 per unit.
Use this information and the activity rates calculated in Problem #1 to find the Unit Cost for an X-ray Machine. (Hint: Your final answer must give the total unit cost for one x-ray machine not the total cost of 490 machines!)
Activity Cost Pool
Total Cost
Total Activity
Assembly
$313,490
29,000
machine-hours
Processing orders
$49,476
1,400
orders
Inspection
$73,882
1,060
inspection-hours
Explanation / Answer
1) Activity Cost Pool Total Costs Total Activity Activity Rate a b a/b Assembly $ 3,13,490 29,000 machine-hours $ 10.81 per machine-hour Processing Order $ 49,476 1,400 orders $ 35.34 per order Inspection $ 73,882 1,060 inspection hours $ 69.70 per inspection hour 2) Step-1:Overhead assignment for 490 units Activity Cost Pool No. of Activity Activity rate Overhead assigned a b a*b Assembly 1,080 $ 10.81 $ 11,674.80 Processing Order 60 $ 35.34 $ 2,120.40 Inspection 20 $ 69.70 $ 1,394.00 Total Overhead assigned $ 15,189.20 Step-2:Overhead cost per unit Overhead cost per unit = Total Overhead assigned/Total unit produced = $ 15,189.20 / 490 = $ 31.00 Step-3:Calculate cost per unit Per Unit Direct Material cost $ 46.42 Direct Labor cost $ 20.22 Overhead cost $ 31.00 Total cost $ 97.64 Thus, Unit cost for an X-ray Machine is $ 97.64
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.