Carter Company manufactures two products, Deluxe and Regular, and uses a traditional two - stage cost allocation
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Question:
Carter Company manufactures two products, Deluxe and Regular, and uses a traditional twostage cost allocation system. The first stage assigns all factory overhead costs to two production departments, A and B based on machine hours. The second stage uses direct labor hours to allocate overhead to individual products.
For the current year, the firm budgeted $ total factory overhead cost. The $ was for the planned levels of machine and direct labor hours shown in the following table.
Production Department A Production Department B
Machine hours
Direct labor hours
The following information relates to the firms operations for the month of January:
Deluxe Regular
Units produced and sold
Unit cost of direct materials $ $
Hourly direct labor wage rate $ $
Direct labor hours in Department A per unit
Direct labor hours in Department B per unit
Carter Company is considering implementing an activitybased costing system. Its management accountant has collected the following information for activity cost analysis for the current year:
Activity Budgeted Overhead Cost Driver Budgeted Quantity Driver Consumption
Deluxe Regular
Material movement $ Number of production runs
Machine setups Number of setups
Inspections Number of units
Shipment Number of shipments
$
Required:
Calculate the unit cost for each of the two products under the existing volumebased costing system. Round "Regular unit cost" to decimal places.
Calculate the overhead per unit of the cost driver under the proposed ABC system. Round your answers to decimal places.
Calculate the unit cost for each of the two products if the proposed ABC system is adopted. Round your intermediate calculations to decimal place and final answers to decimal places.
Related Book For
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078025662
10th edition
Authors: Ronald Hilton, David Platt
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