Calculate the budgeted unit cost of basic and deluxe trophies based on a single plant-wide overhead rate, if total overhead is allocated based on total direct costs. (Don’t forget to include direct material and direct manufacturing labor cost in your unit cost calculation.) 2. Calculate the budgeted unit cost of basic and deluxe trophies based on departmental overhead rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct manufacturing labor costs of the assembly department. 3. Calculate the budgeted unit cost of basic and deluxe trophies if Acclaim allocates overhead costs in each department using activity-based costing, where setup costs are allocated based on number of batches and general overhead costs for each department are allocated based on direct manufacturing labor costs of each department.
5-22 Plant-wide, department, and activity-cost rates. Acclaim Inc. makes two styles of trophies, basic
and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce
10,000 basic trophies and 5,000 deluxe trophies. Manufacturing takes place in two production departments:
forming and assembly. In the forming department, indirect
cost pools, setup and general overhead. In the assembly department, all indirect manufacturing costs are
accumulated in one general overhead cost pool. The basic trophies are formed in batches of 200 but because of the more intricate detail of the deluxe trophies, they are formed in batches of 50.
The controller has asked you to compare plant-wide, department, and activity-based cost allocation.
Acclaim Budgeted Information for the Year Ended November 30, 2017
Forming Department Basic Deluxe Total
Direct materials $60,000 $35,000 $95,000
Direct manufacturing labor 30,000 20,000 50,000
Overhead costs
Setup 48,000
General overhead 32,000
Assembly Department Basic Deluxe Total
Direct materials $ 5,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Overhead costs
General overhead 40,000
1. Calculate the budgeted unit cost of basic and deluxe trophies based on a single plant-wide overhead
rate, if total overhead is allocated based on total direct costs. (Don’t forget to include direct material
and direct manufacturing labor cost in your unit cost calculation.)
2. Calculate the budgeted unit cost of basic and deluxe trophies based on departmental overhead rates,
where forming department overhead costs are allocated based on direct manufacturing labor costs of
the forming department and assembly department overhead costs are allocated based on total direct
manufacturing labor costs of the assembly department.
3. Calculate the budgeted unit cost of basic and deluxe trophies if Acclaim allocates overhead costs in
each department using activity-based costing, where setup costs are allocated based on number of
batches and general overhead costs for each department are allocated based on direct manufacturing
labor costs of each department.
4. Explain briefly why plant-wide, department, and activity-based costing systems show different costs
for the basic and deluxe trophies. Which system would you recommend and why?
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