Marine, Inc. manufactures a product that is available in both a flexible and a rigid model,...
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Marine, Inc. manufactures a product that is available in both a flexible and a rigid model, The company has made the rigid model for years: the flexible model was introduced several years ago to tap a new segment of the market. Since introduction of the flexible model, the company's profits have steadily declined, and managemet has become concerned about the accuracy of its costing system. Sales of the fiexible model have been increasing rapidly Overhead is applied to products on the basis of direct iabor-hours. At the beginning of the current year, management estimated that $506.000 in overhead costs would be incurred and the company would produce and sell 1,500 units of the fiexible model and 8,500 units of the reguler model. The fiexible modei requires 22 hours of direct labor time per unit, and the regular model requires 110 hours. Direct materials and labor costs per unit are given below Wieble Direct materials cost per unit Direct labor cost per unit Rigid 5 60 $ 10 $ 35 Required: 1-a. Compute the predetermined overhead rete using direct labor-hours as the basis for allocating overhead costs to products 1-b. Compute the unit product cost for one unit of each model 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed as follows. Eopected Activity Activity Cost Pool and Activity Measure Purchase orders (nunber of orders) Rework requests (nunber of requests) Product testing (number of tests) Hachine related (nachine-hours) Estinated Overhead Cost $21,000 11,00 a5e,e 224, 00 Flexthle Total 525 gid 415 210 1,ese 2,2e 11e 65 275 2, 3,200 1,00 Compute the activity rate for each of the activity cost pools. 3-a. Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year 3-b. Using activity-based costing, compute the unit product cost for one unit of each model Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Reg 2 Reg 3A Reg 38 Compute the activity rate for each of the activity cost pools, Activity Rate per order Activity Cest Pot Purchase orders Rework requests Product testing Machinerelated request per test MH Marine, Inc. manufactures a product that is available in both a flexible and a rigid model, The company has made the rigid model for years: the flexible model was introduced several years ago to tap a new segment of the market. Since introduction of the flexible model, the company's profits have steadily declined, and managemet has become concerned about the accuracy of its costing system. Sales of the fiexible model have been increasing rapidly Overhead is applied to products on the basis of direct iabor-hours. At the beginning of the current year, management estimated that $506.000 in overhead costs would be incurred and the company would produce and sell 1,500 units of the fiexible model and 8,500 units of the reguler model. The fiexible modei requires 22 hours of direct labor time per unit, and the regular model requires 110 hours. Direct materials and labor costs per unit are given below Wieble Direct materials cost per unit Direct labor cost per unit Rigid 5 60 $ 10 $ 35 Required: 1-a. Compute the predetermined overhead rete using direct labor-hours as the basis for allocating overhead costs to products 1-b. Compute the unit product cost for one unit of each model 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed as follows. Eopected Activity Activity Cost Pool and Activity Measure Purchase orders (nunber of orders) Rework requests (nunber of requests) Product testing (number of tests) Hachine related (nachine-hours) Estinated Overhead Cost $21,000 11,00 a5e,e 224, 00 Flexthle Total 525 gid 415 210 1,ese 2,2e 11e 65 275 2, 3,200 1,00 Compute the activity rate for each of the activity cost pools. 3-a. Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year 3-b. Using activity-based costing, compute the unit product cost for one unit of each model Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Reg 2 Reg 3A Reg 38 Compute the activity rate for each of the activity cost pools, Activity Rate per order Activity Cest Pot Purchase orders Rework requests Product testing Machinerelated request per test MH
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Solution 1a Predetermined overhead rate Particulars Unit Hours Total Hours Flexible Model 1500 220 3... View the full answer
Related Book For
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
Posted Date:
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