Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory...
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Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities: Activity Activity Cost Activity Base Production setup Procurement Quality control Materials management Total $ 39,000 Number of setups 104,500 Number of purchase orders (PO) 176,000 Number of inspections 172,000 Number of components $491,500 The activity-base usage quantities for each product are as follows: Purchase Setups Inspections Components Unit Volume Orders Custom 200 900 1,800 450 2,000 Standard 100 200 400 350 2,000 Total 300 1,100 2,200 800 4,000 a. Determine an activity rate for each activity. Activity Rates Production Setup Procurement Quality Control Materials Management Activity cost $ 3,150,000 $ 194,500 X $ 176,000 Activity base 300 1,100 2,200 172,000 800 Activity rate 10,500 X/setup $ 176.82 X X/PO $ 80 /inspection 215 /component b. Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit costs to the nearest cent. Custom Standard Setups Total 2,100,000 1,050,000 Purchase 159,138 X 35,364 X Orders Total Inspections 144,000 32,000 Total Components 96,750 75,250 Total Total product cost 2,499,888 X 1,192,614 X Unit volume 2,000 2,000 Unit cost 1,249.94 X 596.31 c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your answer to the nearest cent. $ 923.12 X per unit d. The custom product will consume more materials management activities than will the standard product. Zeus Industries manufactures two types of electrical power units, custom and standard, which involve four factory overhead activities-production setup, procurement, quality control, and materials management. An activity analysis of the overhead revealed the following estimated activity costs and activity bases for these activities: Activity Activity Cost Activity Base Production setup Procurement Quality control Materials management Total $ 39,000 Number of setups 104,500 Number of purchase orders (PO) 176,000 Number of inspections 172,000 Number of components $491,500 The activity-base usage quantities for each product are as follows: Purchase Setups Inspections Components Unit Volume Orders Custom 200 900 1,800 450 2,000 Standard 100 200 400 350 2,000 Total 300 1,100 2,200 800 4,000 a. Determine an activity rate for each activity. Activity Rates Production Setup Procurement Quality Control Materials Management Activity cost $ 3,150,000 $ 194,500 X $ 176,000 Activity base 300 1,100 2,200 172,000 800 Activity rate 10,500 X/setup $ 176.82 X X/PO $ 80 /inspection 215 /component b. Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit costs to the nearest cent. Custom Standard Setups Total 2,100,000 1,050,000 Purchase 159,138 X 35,364 X Orders Total Inspections 144,000 32,000 Total Components 96,750 75,250 Total Total product cost 2,499,888 X 1,192,614 X Unit volume 2,000 2,000 Unit cost 1,249.94 X 596.31 c. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your answer to the nearest cent. $ 923.12 X per unit d. The custom product will consume more materials management activities than will the standard product.
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Accounting
ISBN: 978-1285743615
26th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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