iCompany manufactures two models of tablets. The 8-inch Model is a smaller unit with less features. The
Question:
iCompany manufactures two models of tablets. The 8-inch Model is a smaller unit with less features. The larger 12-inch Model provides not only a larger screen but also increased memory to hold more apps. Data regarding the two product lines is as follows: | 8 inch 12-inch | ||
Expected Production | 100,000 units | 60,000 units | |
Direct Material Cost | $52.50 | $79.50 | |
Direct Manufacturing Labor | $20.00 | $20.00 | |
iCompany is considering implementing an activity based costing system in its factory and has identified four indirect cost categories as follows: | 8 inch 12 inch | Budgeted Overhead Cost | |||
Equipment setup | 10 setups | 15 setups | $75,000 | ||
Machine processing | 80,000 machine hours | 60,000 machine hours | $875,000 | ||
Quality control | 12,000 inspection hours | 8,000 inspection hours | $350,000 | ||
Packaging/Shipping | 750 shipments | 500 shipments 1. Calculate the manufacturing activity cost rate for each activity using ABC. 2. Calculate the unit cost of each model using ABC. 3. Assume the company currently allocates indirect manufacturing overhead on the basis of direct labour costs. Calculate the unit cost of each model using direct labour traditional method. | |||
Expert Answer:
Complete required solution is given below 1Manufacturing activity cost rate for each activity using ... View the full answer
