E18-21;Calculating Activity-based Costing Overhead Rates;Assume that manufacturing overhead for Glassman Company in the previous exercise consisted of the following activities and costs;Setup (1,000 setup hours) $144,000;Production scheduling (400 batches) 60,000;Production engineering (60 change orders) 120,000;Supervision (2,000 direct labor hours) 56,000;Machine maintenance (12,000 machine hours) 84,000;Total activity costs $464,000;The following additional data were provided for Job 845;Direct materials costs $7,000;Direct labor cost (5 Milling direct labor hours;35 Finishing direct labor hours) $1000;Setup hours 5 hours;Production scheduling 1 batch;Machine hours used (25 Milling machine hours;5 Finishing machine hours 30 hours;Production engineering 3 change orders;a. Calculate the cost per unit of activity driver for each activity cost category.;b. Calculate the cost of Job 845 using ABC to assign the overhead costs.;c. Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours calculated in the previous exercise.;d. Calculate the cost of Job 845 using the machine hour departmental overhead rate for the Milling Department and a direct labor hour overhead rate for the Finishing Department.;E18-24;Traditional Product Costing versus Activity Based Costing;Assume that Panasonic Company has determined its estimated total manufacturing overhead cost for one of its plants to be $204,000 consisting of the following activity cost pools for the month.;Activity Center Activity Costs Cost Driver Activity Level;Assembly setup $45,000 Setup hours 1,500;Material Handling 15,000 Number of moves 300;Assembly 120,000 Assembly hours 12,000;Maintenance 24,000 Maintenance hours 1,200;Total $204,000;Total direct labor hours used during the month were 8,000. Panasonic produced many different electronic products, including the following two products produced during the current month;Model x301 Modelz205;Units produced 1,000 1,000;Direct material cost $15,000 $15,000;Direct Labor Cost $12,500 $12,500;Direct Labor hours 500 500;Setup hours 50 100;Material moves 25 50;Assembly hours 800 800;Maintenance hours 10 40;a. Calculate the total cost per-unit cost of each model using direct labor hours to assign manufacturing overhead to products.;b. Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.;c. Comment on the accuracy of the two methods for determining costs.;d. Discuss some of the strategic implications of your answers to the previous requirements.
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