Carter Company manufactures two products, Deluxe and Regular, and uses a traditional two-stage cost allocation system....
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Carter Company manufactures two products, Deluxe and Regular, and uses a traditional two-stage 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 $1,550,000 total factory overhead cost. The $1,550,000 was for the planned levels of machine and direct labor hours shown in the following table. Production Production Department A Department B Machine hours Direct labor hours 6,200 31,000 24,800 15,500 The following information relates to the firm's operations for the month of January: Units produced and sold Deluxe 310 Regular 1,240 Unit cost of direct materials $ 155 $ 77.50 Hourly direct labor wage rate $ 25 Direct labor hours in Department A per unit Direct labor hours in Department B per unit 2 1 $ 31 2 1 Carter Company is considering implementing an activity-based costing system. Its management accountant has collected the following information for activity cost analysis for the current year: Activity Material movement Machine setups Inspections Shipment Budgeted Overhead $ 10,850 Cost Driver Number of production runs Budgeted Quantity Driver Consumption Deluxe Regular 403 23 31 620,000 Number of setups 775 39 78 911,400 7,750 Number of units 30,380 310 1,240 Number of shipments 388 78 155 $ 1,550,000 Required: 1. Calculate the unit cost for each of the two products under the existing volume-based costing system. (Round "Regular unit cost" to 2 decimal places.) 2. Calculate the overhead per unit of the cost driver under the proposed ABC system. (Round your answers to 2 decimal places.) 3. Calculate the unit cost for each of the two products if the proposed ABC system is adopted. (Round your Intermediate calculations to 1 decimal place and final answers to 2 decimal places.) 1. Deluxe unit cost Regular unit cost 2. Deluxe unit overhead 3. Regular unit overhead Deluxe unit cost Regular unit cost Carter Company manufactures two products, Deluxe and Regular, and uses a traditional two-stage 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 $1,550,000 total factory overhead cost. The $1,550,000 was for the planned levels of machine and direct labor hours shown in the following table. Production Production Department A Department B Machine hours Direct labor hours 6,200 31,000 24,800 15,500 The following information relates to the firm's operations for the month of January: Units produced and sold Deluxe 310 Regular 1,240 Unit cost of direct materials $ 155 $ 77.50 Hourly direct labor wage rate $ 25 Direct labor hours in Department A per unit Direct labor hours in Department B per unit 2 1 $ 31 2 1 Carter Company is considering implementing an activity-based costing system. Its management accountant has collected the following information for activity cost analysis for the current year: Activity Material movement Machine setups Inspections Shipment Budgeted Overhead $ 10,850 Cost Driver Number of production runs Budgeted Quantity Driver Consumption Deluxe Regular 403 23 31 620,000 Number of setups 775 39 78 911,400 7,750 Number of units 30,380 310 1,240 Number of shipments 388 78 155 $ 1,550,000 Required: 1. Calculate the unit cost for each of the two products under the existing volume-based costing system. (Round "Regular unit cost" to 2 decimal places.) 2. Calculate the overhead per unit of the cost driver under the proposed ABC system. (Round your answers to 2 decimal places.) 3. Calculate the unit cost for each of the two products if the proposed ABC system is adopted. (Round your Intermediate calculations to 1 decimal place and final answers to 2 decimal places.) 1. Deluxe unit cost Regular unit cost 2. Deluxe unit overhead 3. Regular unit overhead Deluxe unit cost Regular unit cost
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1 Unit Cost under Existing VolumeBased Costing System Department A Overhead Rate Total Department A Machine Hours 6200 hours Total Factory Overhead 15... View the full answer
Related Book For
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-0078025662
10th edition
Authors: Ronald Hilton, David Platt
Posted Date:
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