Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports...

 

Transcribed Image Text:

Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Rounded Edge Direct materials Direct labor Overhead (using plantwide rate) $ 39,600 13,200 46,200 Squared Edge $ 51,600 34,400 87,400 Total $ 91,200 47,600 133,600 Total product cost Units produced Product cost per unit $ 99,000 13,200 $ 7.50 $ 173,400 17,200 $ 272,400 $ 10.08 Northwest's controller wants to apply activity-based costing to allocate the $133,600 of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The company's budgeted activity usage equals its actual activity usage for the period. The following additional information is collected. Activity Purchasing Depreciation of machinery Setup Budgeted Cost $ 7,000 69,400 57,200 Activity Cost Driver Purchase orders Rounded Edge Activity Usage Squared Edge Total 189 orders Machine hours Setups 500 hours 40 setups 511 orders 1,500 hours 210 setups 700 orders 2,000 hours 250 setups Total $ 133,600 Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing. Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost data. Rounded Edge Direct materials Direct labor Overhead (using plantwide rate) $ 39,600 13,200 46,200 Squared Edge $ 51,600 34,400 87,400 Total $ 91,200 47,600 133,600 Total product cost Units produced Product cost per unit $ 99,000 13,200 $ 7.50 $ 173,400 17,200 $ 272,400 $ 10.08 Northwest's controller wants to apply activity-based costing to allocate the $133,600 of overhead cost to the two products to see whether product cost per unit would change markedly from that above. The company's budgeted activity usage equals its actual activity usage for the period. The following additional information is collected. Activity Purchasing Depreciation of machinery Setup Budgeted Cost $ 7,000 69,400 57,200 Activity Cost Driver Purchase orders Rounded Edge Activity Usage Squared Edge Total 189 orders Machine hours Setups 500 hours 40 setups 511 orders 1,500 hours 210 setups 700 orders 2,000 hours 250 setups Total $ 133,600 Required: 1. Compute the activity rate for each activity using activity-based costing. 2. Compute overhead cost per unit for each of the two products using activity-based costing. 3. Determine product cost per unit for each of the two products using activity-based costing.

Answer rating: 100% (QA)

1 Activity Rate Calculation Purchasing Activity Rate Budgeted Cost 7000 Activity Cost Driver 700 ord... View the full answer