Need help with problem 4-1B

Thank you

Prob 4-1B(Only problems ending in A are in your book; B prob are only below)

VideoPlus, Inc. manufactures two types of DVD players, a deluxe model and a standard model. Annual production is 50,000 units for the deluxe and 20,000 units for the standard.

Both require 2 hours of direct labor for completion. Therefore, total annual direct labor

hours are 140,000 [2 hrs. (20,000 + 50,000)].

Expected annual manufacturing overhead is $1,050,000. Thus, the predetermined

overhead rate is $7.50 ($1,050,000 140,000) per direct labor hour.

The direct materials cost per unit is $42 (deluxe) and $11 (standard) model.

The direct labor cost is $18 per unit for both the deluxe and standard models.

The companys managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows.

Activity Cost Pool	Cost Driver	Estimated Overhead	Expected Use of Cost Drivers	Expected Use of Drivers by Product
				Standard	Deluxe
Purchasing	Orders	$ 126,000	400	100	300
Receiving	Pounds	30,000	20,000	4,000	16,000
Assembling	Number of parts	444,000	74,000	20,000	54,000
Testing	Number of tests	115,000	23,000	10,000	13,000
Finishing	Units	140,000	70,000	20,000	50,000
Packing and shipping	Pounds	195,00 0	80,000	18,000	62,000
		$1,050,000

Instructions

(a)Under traditional product costing, compute the total unit cost of both products.

Prepare a comparative schedule of the individual costs by product ( see page 841).

(b)Under ABC, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver).

(c)Prepare a schedule assigning each activitys cost pool to each product based on the use of cost drivers. (Include a computation of overhead cost per unit, rounding to the nearest cent.)

(d)Compute the total cost per unit for each product under ABC.

(e)Classify each of the activities as a value-added activity or a nonvalue-added activity.

(f)Comment on:

(1) the comparative overhead cost per unit for the two products under ABC, and

(2) the comparative total costs per unit under traditional costing and ABC.

(a)Computation of unit coststraditional costing.

	Products		OH allocated based on DLH how many DLH required for each product?
Manufacturing Costs	Standard Model	Deluxe Model
Direct Materials
Direct Labor
Overhead
Total Unit Cost

(b) computation of A-B-C overhead rates per cost driver

Activity Cost Pool	Estimated Overhead	Expected Use of Cost Drivers	Activity-Based Overhead Rate
Purchasing		400 orders		* Calculate Pack & Ship to 4 decimals per pound. Rounding too soon gives wrong answer in (c) and (d) (by just enough to be wrong)
Receiving		20,000 pounds
Assembling		74,000 parts
Testing		23,000 tests
Finishing		70,000 units
*Packing & Shipping		80,000 pounds

(c)

	Standard Model			Deluxe Model
Activity Cost Pools	Expected Use of Drivers	Overhead Rates	Cost Assigned	Expected Use of Drivers	Overhead Rates	Cost Assigned
Purchasing	100			300
Receiving	4,000			16,000
Assembling	20,000			54,000
Testing	10,000			13,000
Finishing	20,000			50,000
Packing & Shipping	18,000			62,000
Total Costs Assigned
Units Produced			20,000			50,000
Overhead Cost Per Unit

(d)

.

	Products
ABC Manufacturing Costs	Standard Model	Deluxe Model
Direct Materials
Direct Labor
Overhead
Total Unit Cost

(e)

Activity	Value vs Non-Value Added
Purchasing
Receiving
Assembling
Testing
Finishing
Packing & Shipping

(f) Dont forget this: (see answers below in Prob A for guidance NOT copy/paste)

(1)
(2)