Zany Brainy Corp. manufactures two types of lamps, Home size, and Industry size lamps. The company produces
Question:
Zany Brainy Corp. manufactures two types of lamps, Home size, and Industry size lamps. The company produces 10,000 Home size lamps and 2,000 Industry size lamps. Following is the data provided about these two products:
Job Costing vs. ABC Costing Suggested time: Answer the following questions based on the scenario of Zany Brainy:
a. The company's simple (traditional) costing system uses a single indirect- cost pool and allocates costs to the two lamps on the basis of direct manufacturing labor-hours. Under this traditional system, determine the total product cost per unit of each of the company's two products.
b. The company's ABC system uses two indirect-cost pools. One cost pool is for set up costs and the other for advertising, Zany Brainy allocates set up costs to the two lamps based on setup labor-hours and advertising costs based on the direct manufacturing labor-hours. Under the ABC system, determine the total product cost per unit of each of the company's two products.
Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta