Activity-Based Costing Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools: Fabrication Department Finishing Department Cost Driver Maintenance $ 84,000 42,000 Machine hours Materials handling 126,000 63,000 Material moves Machine 294,000 21,000 Machine setups Inspections - 105,000 Inspection hours Total $ 504,000 $ 231,000 The following activity predictions were also made for the year: Fabrication Department Finishing Department Machine hours 5,000 2,500 Material moves 1,500 750 Machine setups 350 25 Inspection hours - 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models: SW100 SG150 Direct materials cost $ 28,000 $ 42,000 Direct labor cost $ 11,200 $ 8,400 Machine hours (Fabrication) 250 350 Machine hours (Finishing) 100 50 Materials moves 20 40 Machine setups 5 10 Inspection hours 15 30 a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours. Round rate to two decimal places. Overhead rate based on total machine hours: $Answer per machine hour Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places. Product Costs per Unit SW100 SG150 Direct materials Direct labor Manufacturing overhead Total cost per batch Number of units per batch Cost per unit b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments. Round to two decimal places, if applicable. Overhead rate based on machine hours for Fabrication Dept.: $Answer per machine hour. Overhead rate based on machine hours for Finishing Dept.: $Answer per machine hour. Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Direct labor Manufacturing overhead: Fabrication Dept. Finishing Dept. Total cost per batch Number of units per batch Cost per unit c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities. Round rate to two decimal places, if applicable. Activity-based overhead rates: Maintenance Materials handling Machine setup Inspection activities Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Direct labor Manufacturing overhead: Maintenance activity Materials handling activity Machine setups activity Inspections activity Total cost per batch Number of units per batch Cost per unit

Activity-Based Costing Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools: Fabrication Department Finishing Department Cost Driver Maintenance $ 84,000 42,000 Machine hours Materials handling 126,000 63,000 Material moves Machine 294,000 21,000 Machine setups Inspections - 105,000 Inspection hours Total $ 504,000 $ 231,000 The following activity predictions were also made for the year: Fabrication Department Finishing Department Machine hours 5,000 2,500 Material moves 1,500 750 Machine setups 350 25 Inspection hours - 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models: SW100 SG150 Direct materials cost $ 28,000 $ 42,000 Direct labor cost $ 11,200 $ 8,400 Machine hours (Fabrication) 250 350 Machine hours (Finishing) 100 50 Materials moves 20 40 Machine setups 5 10 Inspection hours 15 30 a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours. Round rate to two decimal places. Overhead rate based on total machine hours: $Answer per machine hour Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places. Product Costs per Unit SW100 SG150 Direct materials Direct labor Manufacturing overhead Total cost per batch Number of units per batch Cost per unit b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments. Round to two decimal places, if applicable. Overhead rate based on machine hours for Fabrication Dept.: $Answer per machine hour. Overhead rate based on machine hours for Finishing Dept.: $Answer per machine hour. Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Direct labor Manufacturing overhead: Fabrication Dept. Finishing Dept. Total cost per batch Number of units per batch Cost per unit c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities. Round rate to two decimal places, if applicable. Activity-based overhead rates: Maintenance Materials handling Machine setup Inspection activities Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Product Costs per Unit SW100 SG150 Direct materials Direct labor Manufacturing overhead: Maintenance activity Materials handling activity Machine setups activity Inspections activity Total cost per batch Number of units per batch Cost per unit

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 27E: Plata Company has identified the following overhead activities, costs, and activity drivers for the...

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Question

Activity-Based Costing

Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools:

	Fabrication Department	Finishing Department	Cost Driver
Maintenance	$ 84,000	42,000	Machine hours
Materials handling	126,000	63,000	Material moves
Machine	294,000	21,000	Machine setups
Inspections	-	105,000	Inspection hours
Total	$ 504,000	$ 231,000

The following activity predictions were also made for the year:

	Fabrication Department	Finishing Department
Machine hours	5,000	2,500
Material moves	1,500	750
Machine setups	350	25
Inspection hours	-	500

It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models:

	SW100	SG150
Direct materials cost	$ 28,000	$ 42,000
Direct labor cost	$ 11,200	$ 8,400
Machine hours (Fabrication)	250	350
Machine hours (Finishing)	100	50
Materials moves	20	40
Machine setups	5	10
Inspection hours	15	30

a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours.

Round rate to two decimal places.

Overhead rate based on total machine hours: $Answer

per machine hour

Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places.

Product Costs per Unit	SW100	SG150
Direct materials
Direct labor
Manufacturing overhead
Total cost per batch
Number of units per batch
Cost per unit

b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments.

Round to two decimal places, if applicable.

Overhead rate based on machine hours for Fabrication Dept.: $Answer

per machine hour.

Overhead rate based on machine hours for Finishing Dept.: $Answer

per machine hour.

Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.

Product Costs per Unit	SW100	SG150
Direct materials
Direct labor
Manufacturing overhead:
Fabrication Dept.
Finishing Dept.
Total cost per batch
Number of units per batch
Cost per unit

c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities.

Round rate to two decimal places, if applicable.

Activity-based overhead rates:
Maintenance
Materials handling
Machine setup
Inspection activities

Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.

Product Costs per Unit	SW100	SG150
Direct materials
Direct labor
Manufacturing overhead:
Maintenance activity
Materials handling activity
Machine setups activity
Inspections activity
Total cost per batch
Number of units per batch
Cost per unit

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