Gee Manufacturing produces two models of camshafts used in the production of automobile engines: Regular and High Performance. Gee currently uses an ABC system to assign costs to the two products.For the coming year, the company has the following overhead activities, costs, and activity drivers:activityexpected costactivity driveractivity capacitysetups$214,612set up hours10,000machining$420,000machine hours20,000moving$112,500move hours5,000total overhead$747,112 At practical capacity, the expected activity demands for each product are as follows: regular performance modelhigh performance modelunits completed30,0008,000set up hours8,0002,000machine hours6,00014,000moving hours1,0004,000The production cycle time for the regular performance camshaft is 0.50 (hours per unit) and that of the high performance camshaft is 2.5 (hours per unit).Required:Calculate the consumption ratios for each activity. Use these consumption ratios to assign the total overhead to each camshaft model and then calculate the overhead cost per unit for each model (round unit cost to two decimal places).

Expected global consumption ratio: An expected global consumption ratio is the proportion of the…

Answered: Gee Manufacturing produces two models…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...

See similar textbooks

Related questions

Question

Gee Manufacturing produces two models of camshafts used in the production of automobile engines: Regular and High Performance. Gee currently uses an ABC system to assign costs to the two products.

For the coming year, the company has the following overhead activities, costs, and activity drivers:

activity	expected cost	activity driver	activity capacity
setups	$214,612	set up hours	10,000
machining	$420,000	machine hours	20,000
moving	$112,500	move hours	5,000
total overhead	$747,112

At practical capacity, the expected activity demands for each product are as follows:

	regular performance model	high performance model
units completed	30,000	8,000
set up hours	8,000	2,000
machine hours	6,000	14,000
moving hours	1,000	4,000

The production cycle time for the regular performance camshaft is 0.50 (hours per unit) and that of the high performance camshaft is 2.5 (hours per unit).

Required:

Calculate the consumption ratios for each activity. Use these consumption ratios to assign the total overhead to each camshaft model and then calculate the overhead cost per unit for each model (round unit cost to two decimal places).

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 10 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions