IN CLASS PROBLEM ACTIVITY BASED COSTING ONE ALLOCATION BASIS ASSUMPTIONS PRINCIPLES INTERMEDIATE | ADVANCED TAX 20,000 1@$20 1@$10 10 books 5 books per PRODUCT 5,000 S @$20 00 2@$20 15,000 10,000 3@20 2@$10 1 book per 2 hours Ink 3@$10 per book hour 2@$10 Labor productivity Labor rate l per hour hour $10 per hour $10 per $10 per hour hour ing price multi Labor hours2,000 Machine hours 5,0002,000 3,000 10,000 25,000 1,000 2,000 ASSUME TOTAL OVERHEAD IS $200,000 I A. ONE ALLOCATION BASIS-LABOR HOURS Activity Man.PRINCIPLES INTERMEDIATE ADVANCED TXtl cin overhead Rate Labor $200,000 2,000 3,00010,000 hours 10,000 25,000 8 B. COMPUTATION OF OVERHEAD COST ON UNIT BASIS Activity Man. PRINCIPLES INTERMEDIATE 2,000 ADVANCED TAX overhead 1. Labor $200,000 hours 2. Activity rate 3. Allocated overhead 3,000 24,000 80,000 (Line 1X2) 4. Quantity 5. Unit overhead 20,000 $.80 10,000 $8 $1.60 228 Page cost (Line CALCULATION OF UNIT PRODUCT COST, SELLING PRICE AND PREDERTERMINED OVERHEAD RATE (ACTIVITY RATE) PRODUCT PRINCIPLES INTERMEDIATE ADVANCED TAX Ink Labor Overhead Total Unit Cost Selling price 2 multiple 8 Predetermined overhead rate Journal Entries Journal Entry PRINCIPLES INTERMEDIATE ADVANCED TAX Total Purchased Ink Purchased 110,000 90,000 Paper 30,000 20,000 20.00015,000 Ink to WIP 20,000 30,000 Paper to WIP 20,00030,000 Actual labor 2,200 hours 2,800 11,000 9,000 Applied overhead 8,000 4,000- Completed.18,00012,000 books 5,000 13,000 Books Sold 15,00010,000 Actual 210,000 Overhead 229 Page Cost of Goods Manufactured Total ITEM Direct PRINCIPLES INTERMEDIATE ADVANCED TAX Materials Begin Inv Add Purchases l Less Ending Inv. Raw Material Used Direct Labor Applied Over Total Mfg Cost Add Beg WIP Less End WIP Cost of Goods Mf Cost of Goods Sold and Gross Margin PRINCIPLES INTERMEDIATE ADVANCED | TAX Total ITEM Cost of GoodsMfg Less End FG Unadjusted Cogs Add Under or Deduct Over Overhead Less Adjusted COGS Gross Margin