Exercise 7-12 Adams, Inc., is a book publisher that reissues old titles. The com

Question

Exercise 7-12 Adams, Inc., is a book publisher that reissues old titles. The company offers these books with either a standard machine-glued hard cover or a deluxe, hand embossed, hand-stitched, leather cover. Adams currently allocates overhead to the books based on direct labor hours A recent activity analysis conducted by the controller revealed the following information Standard Deluxe Edition 11,000 37,400 2,090 11,000 Edition Units produced Direct labor hours Printing press hours Sales orders 404,000 444,400 76,760 8,080 (a) Calculate the following for each product: (Round answers to 2 decimal places, e.g. 15.25.) Standard edition Deluxe edition i. Direct labor hours per unit ii. Printing press hours per unit iii. Sales orders per unit DLH/unit PPH / unit order/unit DLH/unit PPH / unit order/unit

Explanation / Answer

Calculation of the following for each each prodct Standard Edition Deluxe Edition Direct Labor hours per unit 1.1 DLH/unit 3.4 Printing press Hours per unit 0.19 PPH/unit 0.19 Sales Orders per unit 0.02 order/unit 1 Activity Cost Pool Traceble Costs Number of events Activity rate Total Soldering 994140 1578000 0.63 / joint Shipping 792470 20000 39.6235 / shipment Quality Control 1324300 77900 17 / inspection Purchasing 1158000 193000 6 / purchase order Machining 65490 177000 0.37 / machine hour Setups 750000 30000 25 / set up

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