Using activity-based costing to allocate overhead cost, and compute overhead cost per unit and gross profit...

 

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Using activity-based costing to allocate overhead cost, and compute overhead cost per unit and gross profit per unit Activity Mixing Electricity Inspection Total Additional information on overhead cost follows. Budgeted Cost $160,000 22,000 98,000 $280,000 Activity Cost Driver Budgeted Activity Usage Direct labor hours (DLH) 40,000 Machine hours (MH) 10,000 Inspections 490 Required 1. Compute an activity rate for each activity using activity-based costing. 2. The following actual activity usage produced 12,000 units of Extra Fine and 8,000 units of Family Style. Allocate overhead cost to Extra Fine and to Family Style and compute overhead cost per unit for each product using activity- based costing. Activity Cost Driver Direct labor hours (DLH) Machine hours (MH) Inspections Activity Usage Extra Fine Family Style 28,000 12,000 6,000 4,000 274 216 3. Compute product cost per unit for Extra Fine and for Family Style. 4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit). Sara's Salsa produces salsa in two types: Extra Fine for restaurants and Family Style for home use. The company budgets $280,000 of overhead cost and 40,000 direct labor hours. Additional information follows. Per Unit (case) Selling Price Direct Materials Extra Fine Family Style $64 53 $18 16 Direct Labor $30 25 Using activity-based costing to allocate overhead cost, and compute overhead cost per unit and gross profit per unit Activity Mixing Electricity Inspection Total Additional information on overhead cost follows. Budgeted Cost $160,000 22,000 98,000 $280,000 Activity Cost Driver Budgeted Activity Usage Direct labor hours (DLH) 40,000 Machine hours (MH) 10,000 Inspections 490 Required 1. Compute an activity rate for each activity using activity-based costing. 2. The following actual activity usage produced 12,000 units of Extra Fine and 8,000 units of Family Style. Allocate overhead cost to Extra Fine and to Family Style and compute overhead cost per unit for each product using activity- based costing. Activity Cost Driver Direct labor hours (DLH) Machine hours (MH) Inspections Activity Usage Extra Fine Family Style 28,000 12,000 6,000 4,000 274 216 3. Compute product cost per unit for Extra Fine and for Family Style. 4. For each product, compute the gross profit per unit (selling price per unit minus the product cost per unit). Sara's Salsa produces salsa in two types: Extra Fine for restaurants and Family Style for home use. The company budgets $280,000 of overhead cost and 40,000 direct labor hours. Additional information follows. Per Unit (case) Selling Price Direct Materials Extra Fine Family Style $64 53 $18 16 Direct Labor $30 25

Answer rating: 100% (QA)

SOLUTION Computing Activity Rates To compute the activity rate we divide the budgeted cost for each ... View the full answer