Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments.
Question:
Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products:
Requirement :
) Compute the overhead cost per unit for each product using a plant wide, unit-based rate
using direct labor hours.
2) Compute the overhead cost per unit for each product using departmental rates. In
calculating departmental rates, use machine hours for Department 1 and direct labor hours
for Department 2. Repeat using direct labor hours for Department 1 and machine hours for
Department 2.
3) Compute the overhead cost per unit for each product using activity-based costing.
4) Comment on the ability of departmental rates to improve the accuracy of product costing.
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen