Green Furniture (GF) manufactures a variety of furniture for household use and just two items for...

 

 

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Green Furniture (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and labour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour-hours as the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the system by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Cost Pool Parts receipts Machining Assembly Quality control Direct materials Direct labour Activity Base Number of parts Machine-hours Units produced Units tested Activity Rate $ 2.00 per part $10.00 per machine-hour $ 1.40 per unit $ 3.00 per unit Desks 1,600 parts Activity Usage 160 machine-hours 800 units 80 units $4,000 $9,600 Cabinets 1,100 parts 240 machine-hours 1,100 units 1,000 units $2,200 $9,600 Each product consumed 480 direct labour-hours. Required: 1. Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based costing to allocate overhead costs (Round "Cost per unit" answers to 2 decimal places.) Dusters Cabinets Total manufacturing cost 19,760 $ 20.940 2. Redo the above using direct labour-hours as the allocation base. (Round "Cost per unit" answers to 2 decimal places.) Mops Dusters Total manufacturing cost 33.950 $ 1,100 Cost per unit $ 42.44 $ 29.23 3. This part of the question is not part of your Connect assignment. Green Furniture (GF) manufactures a variety of furniture for household use and just two items for office use: desks and cabinets. The production process for desks and cabinets is similar, although machines must be retooled for each product. Both materials and labour costs are directly traceable to individual products; however, overhead is a common cost and allocated using direct labour-hours as the allocation base. GF's accountant is considering the use of activity-based costing (ABC) and has suggested evaluating the system by applying it to the two office use products (desks and cabinets). The following data are available for a typical quarter. Activity Cost Pool Parts receipts Machining Assembly Quality control Direct materials Direct labour Activity Base Number of parts Machine-hours Units produced Units tested Activity Rate $ 2.00 per part $10.00 per machine-hour $ 1.40 per unit $ 3.00 per unit Desks 1,600 parts Activity Usage 160 machine-hours 800 units 80 units $4,000 $9,600 Cabinets 1,100 parts 240 machine-hours 1,100 units 1,000 units $2,200 $9,600 Each product consumed 480 direct labour-hours. Required: 1. Determine the total manufacturing cost and cost per unit for each of the two product lines for the quarter, using activity-based costing to allocate overhead costs (Round "Cost per unit" answers to 2 decimal places.) Dusters Cabinets Total manufacturing cost 19,760 $ 20.940 2. Redo the above using direct labour-hours as the allocation base. (Round "Cost per unit" answers to 2 decimal places.) Mops Dusters Total manufacturing cost 33.950 $ 1,100 Cost per unit $ 42.44 $ 29.23 3. This part of the question is not part of your Connect assignment.

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To determine the total manufacturing cost and cost per unit for each product line desks and cabinets ... View the full answer