Question

Nifty Company produces three models of aluminum skateboards. The models have minor differences, but their processing operations and production costs are identical.
During June, the following costs were incurred:
Direct materials:
Aluminum frame ................$162,524
Bolts .................... 3,876
Purchased parts:
Wheels .................... 74,934
Decals ..................... 5,066
Materials handling (assigned based on direct materials cost):
Labor ..................... 17,068
Utilities ................... 4,438
Maintenance ................. 914
Depreciation ................. 876
Assembly line (assigned based on labor hours):
Labor ..................... 46,080
Setup (assigned based on number of setups):
Labor ..................... 6,385
Supplies .................... 762
Overhead .................. 3,953
Product testing (assigned based on number of tests):
Labor .................... 2,765
Supplies ................... 435
Building occupancy (assigned based on machine hours):
Insurance .................. 5,767
Depreciation ................ 2,452
Repairs and maintenance ........... 3,781
For June, output totaled 32,000 skateboards. Each board required 1.5 machine hours of effort. During June, Nifty’s assembly line worked 2,304 hours, performed 370 setups and 64,000 product tests, and completed an order for 1,000 skateboards placed by Wow Toys Company. The job incurred costs of $5,200 for direct materials and $2,500 for purchased parts. It required 3 setups, 2,000 tests, and 72 assembly line hours.

Required
1. Compute the following activity cost rates:
(a) Materials handling cost rate,
(b) Assembly line cost rate,
(c) Setup cost rate,
(d) Product testing cost rate,
(e) Building occupancy cost rate.
2. Prepare a bill of activities for the Wow Toys job.
3. Use activity-based costing to compute the job’s total cost and product unit cost. (Round unit costs to the nearest cent.)



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  • CreatedMarch 26, 2014
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