Sheffield Corp. makes many products but is best known for its two styles of park benches:...

Transcribed Image Text:

Sheffield Corp. makes many products but is best known for its two styles of park benches: Classic and Modern. Sheffield initially set up its MOH allocation system to pool all MOH costs into two key departments: Assembly and Finishing. It based Assembly MOH costs on machine hours, and Finishing MOH costs on DL hours. The company understood its costs, set selling prices to cover its costs, and carried on smoothly-until now. Sheffield's president received some phone calls from community members complaining about the bench pricing and reporting that a non-community supplier is priced 25% lower than Sheffield's listed price. In an effort to better understand its costs, Sheffield's accountants gathered the following information for the two departments. Then it found more detailed information on key activities within its overhead costs. Departments Assembly Finishing Total Budgeted MOH Cost Key Activities Materials handling Production setup Assembly Quality control Factory depreciation Total $650,000 556,000 1,206,000 Budgeted Allocation Base 125,000 machine hours 50,000 direct labor hours Quantity Used by: Classic Modern 49,000 20,000 Budgeted MOH Cost $119,000 216,000 462,000 77,000 direct labor hours 186,500 373,000 inspections 222,500 445,000 square feet of space $1,206,000 Budgeted Allocation Base 17,000 material moves 8,000 production runs 31,000 20,000 Quantity Used by: Classic Modern 4,300 2,400 20,000 36,000 129,000 3,500 2,100 20,000 18,000 113,000 (c) Additional information about both the Classic and Modern benches is as follows. Direct material cost/unit Direct labor cost/unit Total units produced Classic $ Determine the unit product cost for each model under the department system as well as under the ABC system. (Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.) Modern Classic $75.00 $46.00 10,000 $ Modern $105.00 $54.00 10,000 Department System $ 1A $ Activity-based System Sheffield Corp. makes many products but is best known for its two styles of park benches: Classic and Modern. Sheffield initially set up its MOH allocation system to pool all MOH costs into two key departments: Assembly and Finishing. It based Assembly MOH costs on machine hours, and Finishing MOH costs on DL hours. The company understood its costs, set selling prices to cover its costs, and carried on smoothly-until now. Sheffield's president received some phone calls from community members complaining about the bench pricing and reporting that a non-community supplier is priced 25% lower than Sheffield's listed price. In an effort to better understand its costs, Sheffield's accountants gathered the following information for the two departments. Then it found more detailed information on key activities within its overhead costs. Departments Assembly Finishing Total Budgeted MOH Cost Key Activities Materials handling Production setup Assembly Quality control Factory depreciation Total $650,000 556,000 1,206,000 Budgeted Allocation Base 125,000 machine hours 50,000 direct labor hours Quantity Used by: Classic Modern 49,000 20,000 Budgeted MOH Cost $119,000 216,000 462,000 77,000 direct labor hours 186,500 373,000 inspections 222,500 445,000 square feet of space $1,206,000 Budgeted Allocation Base 17,000 material moves 8,000 production runs 31,000 20,000 Quantity Used by: Classic Modern 4,300 2,400 20,000 36,000 129,000 3,500 2,100 20,000 18,000 113,000 (c) Additional information about both the Classic and Modern benches is as follows. Direct material cost/unit Direct labor cost/unit Total units produced Classic $ Determine the unit product cost for each model under the department system as well as under the ABC system. (Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.) Modern Classic $75.00 $46.00 10,000 $ Modern $105.00 $54.00 10,000 Department System $ 1A $ Activity-based System

Answer rating: 100% (QA)

To determine the unit product cost for each model under the department system as well as under the ActivityBased Costing ABC system we will use the in... View the full answer