Ellix Company manufactures two models of ultra-high fidelity speakers-the X200 model and the X99 model. Data...
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Ellix Company manufactures two models of ultra-high fidelity speakers-the X200 model and the X99 model. Data regarding the two products follow: Product X200 X99 Direct Labor-Hours 8.5 DLHS per unit 8.7 DLHS per unit Annual Production 18,000 units 35,000 units Activity Cost Pool Machine setups Special processing General factory Additional information about the company follows: a. Model X200 requires $39 in direct materials per unit, and model X99 requires $26. b. The direct labor workers are paid $40 per hour. c. The company has always used direct labor-hours as the allocation base for applying manufacturing overhead cost to products. d. Model X200 is more complex to manufacture than model X99 and requires the use of special equipment. e. Because of the special work required in (d) above, the company is considering the use of activity-based absorption costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows: Total Direct Labor-Hours 9,088 DLHS 24,580 DLHS 33,500 DLHS Activity Measure Number of setups Machine-hours Direct labor-hours Estimated Total Activity Total Estimated Total Cost $ 132,000 80 388,000 970 2,010,000 9,000 24,500 $ 2,530,000 X208 X99 120 @ 200 978 33,500 Required: 1. Assume that the company continues to use direct labor-hours as the allocation base for applying overhead cost to products. a. Compute the plantwide predetermined overhead rate. b. Compute the unit product cost of each model. 2. Assume that the company decides to use activity-based absorption costing to apply overhead cost to products. a. Compute the activity rate for each activity cost pool and determine the amount of overhead cost that would be applied to each model using the activity-based approach. b. Compute the unit product cost of each model. Ellix Company manufactures two models of ultra-high fidelity speakers-the X200 model and the X99 model. Data regarding the two products follow: Product X200 X99 Direct Labor-Hours 8.5 DLHS per unit 8.7 DLHS per unit Annual Production 18,000 units 35,000 units Activity Cost Pool Machine setups Special processing General factory Additional information about the company follows: a. Model X200 requires $39 in direct materials per unit, and model X99 requires $26. b. The direct labor workers are paid $40 per hour. c. The company has always used direct labor-hours as the allocation base for applying manufacturing overhead cost to products. d. Model X200 is more complex to manufacture than model X99 and requires the use of special equipment. e. Because of the special work required in (d) above, the company is considering the use of activity-based absorption costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows: Total Direct Labor-Hours 9,088 DLHS 24,580 DLHS 33,500 DLHS Activity Measure Number of setups Machine-hours Direct labor-hours Estimated Total Activity Total Estimated Total Cost $ 132,000 80 388,000 970 2,010,000 9,000 24,500 $ 2,530,000 X208 X99 120 @ 200 978 33,500 Required: 1. Assume that the company continues to use direct labor-hours as the allocation base for applying overhead cost to products. a. Compute the plantwide predetermined overhead rate. b. Compute the unit product cost of each model. 2. Assume that the company decides to use activity-based absorption costing to apply overhead cost to products. a. Compute the activity rate for each activity cost pool and determine the amount of overhead cost that would be applied to each model using the activity-based approach. b. Compute the unit product cost of each model.
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1 Using Direct LaborHours as the Allocation Base Traditional Absorption Costing a Compute the plantwide predetermined overhead rate Total Estimated Overhead Cost Total Direct LaborHours Total Estimate... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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