Bob Russo, cost accounting manager for Hemple Products, was asked to determine the costs of the activities
Question:
Bob Russo, cost accounting manager for Hemple Products, was asked to determine the costs of the activities performed within the company's Manufacturing Engineering Department. The department has the following activities: creating bills of materials BOMs studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tools. The resource costs from the general ledger and the times to perform one unit of each activity are provided below.
Resource Costs Activities Unit Time Driver
Salaries $ Creating BOMs hr No of BOMs
Equipment Designing tools hrs No of tool designs
Supplies Improving processes hrs Process improvement hrs
Total $ Training employees hrs No of training sessions
Studying capabilities hrs Study hours
Total machine and labor hours at practical capacity:
Machine hours
Engineering hours
Total hours
The activity, designing tools, uses the number of tools designed as the activity driver. Using a traditional approach, the cost of the designing tools activity was determined to be $ with an expected activity output of for the coming year. During the first week of the year, two jobs Job and Job had a demand for and new tools, respectively.
Required:
Calculate the capacity cost rate for the Manufacturing Engineering Department. $ per hour.
Using the capacity cost rate, determine the activity rates for each activity. Round your answers to the nearest cent.
added complexity. Round your answers to two decimal places. Place the amounts left to right, lowest to highest.
BOM time
Calculate the activity rate for the activity of creating a BOM for custom products. Round your answer to the nearest cent.
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen