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Management Accountant

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;1. In the past, the Larry?s Lawnmowers Ltd. (LLL) allocated indirect manufacturing costs based on direct labour hours. Recently, management has decided to pilot a system of time-driven activity-based costing to allocate these costs. The division produces two lawnmower models: Lo-cost and Deluxe. The following information has been obtained from the company?s records over the past year;Lo-cost;Deluxe;Units produced;500,000;50,000;Direct labour hours incurred;200,000;40,000;Inspections per lawnmower;2;4;Time for each inspection (hrs.);.1;.3;Lawnmowers packed and shipped per batch;2,000;500;Individual lawnmower packing time (hrs.);.25;.4;Additional preparation time per batch (hrs.);30;15;LLL employs 245 employees to perform indirect labour functions, rotating among machine setups, final inspections and shipping. Each employee is paid $50,000 per year on average, including benefits. On average, each employee works 1,600 hours per year.;200 automated production machines are leased for $14,000,000 in total each year. Each machine is available for 1,600 hours per year, including set up time. Once a machine is set up, no labour is necessary to oversee it. Machine-related information for the year is as follows;Lo-cost;Deluxe;Machine hours per lawnmower;.4;.6;Set up time per run (hrs.);300;600;Number of production runs;100;50;Required;a. Determine the amount of indirect manufacturing costs allocated to one lawnmower of each type (Lo-cost, Deluxe) based on the existing cost allocation basis (direct labour hours).;b. Determine the indirect manufacturing support costs for one lawnmower of each type using time-driven activity-based costing. Use the following format. Show supporting calculations separately.;Lo-cost;Deluxe;1. Indirect labour;a. Machine set up;b. Shipping;Total indirect labour;2. Machines;a. Machine set up;b. Machine production;Total machine costs;Total indirect mfg. costs

 

Paper#80960 | Written in 18-Jul-2015

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