Question

Tailgator Company produces four versions of its model J7-21 bicycle seat. The four versions have different shapes, but their processing operations and production costs are identical. During July, the following costs were incurred:
Direct materials:
Leather ................ $25,430
Metal frame ............... 39,180
Bolts ................. 3,010
Materials handling:
Labor ................ 8,232
Equipment depreciation ......... 4,410
Electrical power ............ 2,460
Maintenance ............... 5,184
Assembly:
Direct labor .............. 13,230
Engineering design:
Labor ................. 4,116
Electrical power ............ 1,176
Engineering overhead ........... 7,644
Overhead:
Equipment depreciation ......... 7,056
Indirect labor ............. 30,870
Supervision ............... 17,640
Operating supplies ............ 4,410
Electrical power ............. 10,584
Repairs and maintenance ......... 21,168
Building occupancy overhead ...... 52,920
July’s output totaled 29,400 units. Each unit requires three machine hours of effort. Materials handling costs are allocated to the products based on direct materials cost, engineering design costs are allocated based on units produced, and overhead is allocated based on machine hours. Assembly costs are allocated based on direct labor hours, which are estimated at 882 for July.
During July, Tailgator completed 520 bicycle seats for Job 14. The activity usage for Job 14 was as follows: direct materials, $1,150; direct labor hours, 15.

Required
1. Compute the following activity cost rates:
(a) Materials handling cost rate,
(b) Assembly cost rate,
(c) Engineering design cost rate,
(d) Overhead rate.
2. Prepare a bill of activities for Job 14.
3. Use activity-based costing to compute the job’s total cost and product unit cost. (Round activity costs to the nearest dollar, and round unit costs to the nearest cent.)



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  • CreatedMarch 26, 2014
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