Miller Manufacturing (2M) makes a variety of components for mechanized agricultural equipment. The products are similar...

  

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Miller Manufacturing (2M) makes a variety of components for mechanized agricultural equipment. The products are similar but not identical, and all go through many of the same processes. 2M sells products worldwide and has to comply with various regulations regarding environmental and health and safety compliance. For the most part, 2M manufacturing practices comply with or exceed requirements in the countries to which it ships its products, but depending on the specific part ordered, it might have to go through additional certification processes to make the sale. The company produces to order and never has any work-in-process inventories. The manufacturing facility uses a job costing system for product costing. Manufacturing overhead is applied to jobs based on direct labor cost. The cost analyst at 2M recently put together an estimate of overhead for the coming year, which is shown in the following table: Category Fabricating Machining Machine setup Shipping Certification Total The following are estimates for the three jobs planned for March: Direct materials Direct labor Number of units Direct labor hours Amount $ 480,000 960,000 768,000 432,000 240,000 $ 2,880,000 Machine-hours Setup-hours Certification required? Job MM03-11 $ 9,600 $ 24,000 300 360 750 15 Yes Job MM03-12 $ 14,400 $ 38,400 750 1,200 1,050 30 Yes Job MM03-13 $ 12,000 $ 31,200 600 540 900 15 No the system and has recommended the S 2M is considering adopting an activity-based costing system. The cost analyst has studied the system and has recommended the following cost drivers for each of the overhead categories. The analyst has also estimated the annual volume for each of the cost drivers. This information follows. Overhead Category Fabricating Machining Machine setup Shipping Certification Cost Driver Direct labor-hour Machine-hours Setups-hours Units Certifications required The average direct labor rate at 2M is $40 per hour. a. Using the current costing system b. Using the ABC system Annual Cost Driver Volume 24,000 direct labor-hours 30,000 machine-hours 1,200 setup-hours Job MM03-11 180,000 units Required: a. What is the unit cost for each of the three jobs started and completed assuming 2M uses its current costing system? Note: Round your answers to 2 decimal places. b. What is the unit cost for each of the three jobs started and completed assuming 2M adopts the ABC system as designed by the cost analyst? Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. 20 certifications required Unit Cost Job MM03-12 Job MM03-13 Miller Manufacturing (2M) makes a variety of components for mechanized agricultural equipment. The products are similar but not identical, and all go through many of the same processes. 2M sells products worldwide and has to comply with various regulations regarding environmental and health and safety compliance. For the most part, 2M manufacturing practices comply with or exceed requirements in the countries to which it ships its products, but depending on the specific part ordered, it might have to go through additional certification processes to make the sale. The company produces to order and never has any work-in-process inventories. The manufacturing facility uses a job costing system for product costing. Manufacturing overhead is applied to jobs based on direct labor cost. The cost analyst at 2M recently put together an estimate of overhead for the coming year, which is shown in the following table: Category Fabricating Machining Machine setup Shipping Certification Total The following are estimates for the three jobs planned for March: Direct materials Direct labor Number of units Direct labor hours Amount $ 480,000 960,000 768,000 432,000 240,000 $ 2,880,000 Machine-hours Setup-hours Certification required? Job MM03-11 $ 9,600 $ 24,000 300 360 750 15 Yes Job MM03-12 $ 14,400 $ 38,400 750 1,200 1,050 30 Yes Job MM03-13 $ 12,000 $ 31,200 600 540 900 15 No the system and has recommended the S 2M is considering adopting an activity-based costing system. The cost analyst has studied the system and has recommended the following cost drivers for each of the overhead categories. The analyst has also estimated the annual volume for each of the cost drivers. This information follows. Overhead Category Fabricating Machining Machine setup Shipping Certification Cost Driver Direct labor-hour Machine-hours Setups-hours Units Certifications required The average direct labor rate at 2M is $40 per hour. a. Using the current costing system b. Using the ABC system Annual Cost Driver Volume 24,000 direct labor-hours 30,000 machine-hours 1,200 setup-hours Job MM03-11 180,000 units Required: a. What is the unit cost for each of the three jobs started and completed assuming 2M uses its current costing system? Note: Round your answers to 2 decimal places. b. What is the unit cost for each of the three jobs started and completed assuming 2M adopts the ABC system as designed by the cost analyst? Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. 20 certifications required Unit Cost Job MM03-12 Job MM03-13

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To calculate the unit cost for each of the three jobs using 2Ms current costing system we need to allocate manufacturing overhead based on direct labor cost Step 1 Calculate the predetermined overhead ... View the full answer