Academy Electronics produces video games in three market categories: commercial, home, and miniature. Academy has traditionally...
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Academy Electronics produces video games in three market categories: commercial, home, and miniature. Academy has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system Ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Total Pooled Cost Types of Costs $440,000 Indirect labor wages, supplies, factory utilities, machine maintenance 254,400 Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling 125,600 Research and development 320,000 Rent, general utilities, maintenance, facility depreciation, administrative salaries Additional data for each of the product lines follow: Cost Driver Machine hours Number of production orders Time spent by research department Square footage Direct materials cost Direct labor cost Number of labor hours Number of machine hours Number of production orders Research and development time Number of units Square footage Required Commercial $ 25.20 per unit $ 11.00 per hour 6,000 10,000 Hone $15.20 per unit $9.00 per hour Miniature $12.20 per unit $10.00 per hour Total 12,000 45,000 2,000 25,000 20,000 80,000 200 2,000 800 3,000 10% 20% 70% 100% 15,000 20,000 45,000 50,000 14,000 30,000 74,000 100,000 a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount. Academy Electronics produces video games in three market categories: commercial, home, and miniature. Academy has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system Ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Total Pooled Cost Types of Costs $440,000 Indirect labor wages, supplies, factory utilities, machine maintenance 254,400 Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling 125,600 Research and development 320,000 Rent, general utilities, maintenance, facility depreciation, administrative salaries Additional data for each of the product lines follow: Cost Driver Machine hours Number of production orders Time spent by research department Square footage Direct materials cost Direct labor cost Number of labor hours Number of machine hours Number of production orders Research and development time Number of units Square footage Required Commercial $ 25.20 per unit $ 11.00 per hour 6,000 10,000 Hone $15.20 per unit $9.00 per hour Miniature $12.20 per unit $10.00 per hour Total 12,000 45,000 2,000 25,000 20,000 80,000 200 2,000 800 3,000 10% 20% 70% 100% 15,000 20,000 45,000 50,000 14,000 30,000 74,000 100,000 a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount.
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Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
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