Bert producers manufactures two types of computerized scoreboards, custom and standard. Each scoreboard involves three manufacturing...
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Bert producers manufactures two types of computerized scoreboards, custom and standard. Each scoreboard involves three manufacturing processes, cutting, assembly and packing. The company uses an activity-based costing system to allocate its overhead cost to the manufacturing process. In using the activity-based cost system the company uses four overhead activities, production setup, procurement, quality control and materials management, in each production department. An activity analysis of the overhead related to the cutting department revealed the following estimated costs and activity bases for the four overhead activities. Activity Production setup Procurement Quality control Materials management Total Custom Standard Total 300 60 360 Cost $ The activity-based usage quantities for each product in the cutting department are as follows: Purchase order Inspections Component Units Setups Requisition 750 150 900 32,400 117,000 131,250 112.500 $393.150 1,500 375 1,875 Required: a) Determine the cost driver rate for each activity. 225 75 300 3,750 3,750 7,500 (6 marks) b) Calculate the total overhead cost assigned to each product in the cutting department using the rates computed in A (12 marks) c) Determine the unit activity (overhead) for each product in the cutting department. (4 marks) (4 marks) (4 marks) Total 30 marks d) Distinguish between activity-based costing and traditional costing. e) Outline the stages of the ABC process Bert producers manufactures two types of computerized scoreboards, custom and standard. Each scoreboard involves three manufacturing processes, cutting, assembly and packing. The company uses an activity-based costing system to allocate its overhead cost to the manufacturing process. In using the activity-based cost system the company uses four overhead activities, production setup, procurement, quality control and materials management, in each production department. An activity analysis of the overhead related to the cutting department revealed the following estimated costs and activity bases for the four overhead activities. Activity Production setup Procurement Quality control Materials management Total Custom Standard Total 300 60 360 Cost $ The activity-based usage quantities for each product in the cutting department are as follows: Purchase order Inspections Component Units Setups Requisition 750 150 900 32,400 117,000 131,250 112.500 $393.150 1,500 375 1,875 Required: a) Determine the cost driver rate for each activity. 225 75 300 3,750 3,750 7,500 (6 marks) b) Calculate the total overhead cost assigned to each product in the cutting department using the rates computed in A (12 marks) c) Determine the unit activity (overhead) for each product in the cutting department. (4 marks) (4 marks) (4 marks) Total 30 marks d) Distinguish between activity-based costing and traditional costing. e) Outline the stages of the ABC process
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Related Book For
Practical Management Science
ISBN: 978-1305250901
5th edition
Authors: Wayne L. Winston, Christian Albright
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