EyeGuard Equipment Incorporated (EEI) manufactures protective eyewear for use in commercial and home applications. The product...

   

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EyeGuard Equipment Incorporated (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines-the highest- quality product is called Safe-T, and a low-cost, value version is called Safe-V. Information on the factory conversion costs for EEI is as follows: Salaries Supplies Factory expense Total EEI uses ABC to determine the unit costs of its products. The firm uses resource consumption cost drivers based on rough estimates of the amount that each activity consumes, as shown below. EEI has four activities: job setup, assembly, inspecting and finishing, and packaging. Activities Factory Costs $ 849,000 149,000 549,000 $ 1,547,000 Setup Assembly Inspect and finishing Packaging Salaries Supplies Factory expense The activity cost drivers for the two products are summarized below. Batches Units Setup 20% 25 Finishing hours, per unit Packaging hours, per unit Materials per unit Inspecting Assembly and Finishing Packaging 60% 15% 5% 60 15 90 10 Activity Driver Batch Units Finishing hours Packing hours Safe-V 240 59,000 0.30 0.20 $ 4.00 Safe-T 590 71,000 0.20 0.10 $5.00 Total 100% 100 100 Required: 1. Determine the amount of the cost pool for each of the four activities. 2. Determine the activity-driver rates for assigning factory costs to the two products. 3. Determine the activity-based unit cost for each of the products. EyeGuard Equipment Incorporated (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines-the highest- quality product is called Safe-T, and a low-cost, value version is called Safe-V. Information on the factory conversion costs for EEI is as follows: Salaries Supplies Factory expense Total EEI uses ABC to determine the unit costs of its products. The firm uses resource consumption cost drivers based on rough estimates of the amount that each activity consumes, as shown below. EEI has four activities: job setup, assembly, inspecting and finishing, and packaging. Activities Factory Costs $ 849,000 149,000 549,000 $ 1,547,000 Setup Assembly Inspect and finishing Packaging Salaries Supplies Factory expense The activity cost drivers for the two products are summarized below. Batches Units Setup 20% 25 Finishing hours, per unit Packaging hours, per unit Materials per unit Inspecting Assembly and Finishing Packaging 60% 15% 5% 60 15 90 10 Activity Driver Batch Units Finishing hours Packing hours Safe-V 240 59,000 0.30 0.20 $ 4.00 Safe-T 590 71,000 0.20 0.10 $5.00 Total 100% 100 100 Required: 1. Determine the amount of the cost pool for each of the four activities. 2. Determine the activity-driver rates for assigning factory costs to the two products. 3. Determine the activity-based unit cost for each of the products.

Answer rating: 100% (QA)

SetupAssemblyInspecting and FinishingPackagingSalaries12750046750017000085000Supplies300009000030000... View the full answer