A B C D E F Expected Activity $550,000 (a) What is the traditional unit product

Question

A

B

C

D

E

F

Expected Activity

$550,000

(a)

What is the traditional unit product cost for the Deluxe model after this change?

What is the ABC unit product cost for the Deluxe model after this change? (Round your intermediate calculations and final answer to 2 decimal places.)

A

B

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1 Chapter 3: Applying Excel 2 3 Enter a formula into each of the cells marked with a ? below 4 Review Problem: Activity-Based Costing 5         6 Data 7     Deluxe Tourist 8 Annual sales in units 2,000 10,000 9 Direct materials per unit $25 $17 10 Direct labor-hours per unit 5 4 11 12 Direct labor rate $12 per DLH 13 14 Estimated 15 Overhead

Expected Activity

16 Activities and Activity Measures Cost Deluxe Tourist Total 17 Labor related (direct labor-hours) $ 80,000 10,000 40,000 50,000 18 Machine setups (setups) 150,000 3,000 2,000 5,000 19 Production orders (orders) 70,000 270 230 500 20 General factory (machine-hours) 250,000 12,000 28,000 40,000 21

$550,000

22

(a)

What is the traditional unit product cost for the Deluxe model after this change?

(c)

What is the ABC unit product cost for the Deluxe model after this change? (Round your intermediate calculations and final answer to 2 decimal places.)

Explanation / Answer

CALCULATION OF UNIT COSTING AS PER ABC METHOD Particulars Delux Tourist (2, 000 Units) (10,000 Units) Direct Material $25 $17 Direct Labour $60 $48 (5 Hrs X $ 12) (4 Hrs X $ 12) Overhead Cost: Labor related (direct labor-hours) $8.0 $6.4 Machine setups (setups) $45.0 $6.0 Production orders (orders) $18.9 $3.2 General factory (machine-hours) $37.5 $17.5 Total Cost Per unit $194.4 $98.1 Calculation of the Cost Driver Rate Per Unit Per Product Total Activity of Delux Rate of Activity Total Activity "/" By No. of Units Rate Per unit Direct Labour Related = $80,000 10000 $1.6 $16,000.0 2000 $8.0 Divide by " / " total Activity = 50000 Total Activity of Tourist Activity Rate $1.6 40000 $1.6 $64,000.0 10000 $6.4 Total Cost $80,000.0 Machiene Related = $1,50,000.0 Total Activity of Delux Rate of Activity Total Activity "/" By No. of Units Rate Per unit Divide by " / " 3000 $30.0 $90,000.0 2000 $45.0 total Activity = 5000 Activity Rate $30.00 Total Activity of Tourist 2000 $30.0 $60,000.0 10000 $6.0 Total Cost $1,50,000.0 Production Orders = $70,000.0 Total Activity of Delux Rate of Activity Total Activity "/" By No. of Units Rate Per unit Divide by " / " 270 $140.0 $37,800.0 2000 $18.9 total Activity = 500 Activity Rate $140.00 Total Activity of Tourist 230 $140.0 $32,200.0 10000 $3.2 Total Cost $70,000.0 General Factory Machiene - Hours $2,50,000.0 Total Activity of Delux Rate of Activity Total Activity "/" By No. of Units Rate Per unit Divide by " / " 12000 $6.3 $75,000.0 2000 $37.5 total Activity = 40000 Activity Rate $6.25 Total Activity of Tourist 28000 $6.3 $1,75,000.0 10000 $17.5 Total Cost $2,50,000.0

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