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North-South Pole Company produces two products, a jacket suitable for adventure-seeking people (Spirit) and a jacket for less-adventurous people (Companion). Production and Sales per year Direct labour 20,000 units (Spirit) & 5,000 units (Companion) 3.5 hours per unit (both) $32.00 per hour $285,000 $180 per unit (both) Direct labour cost Estimated annual manufacturing overhead Direct materials Breakdown of overhead rates Activity Based Overhead Rates Estimated Expected Use of Cost Drivers per Activity Activity Cost Pools Overhead Machine set-up Sewing Inspection $ 40,000 $135,000 $ 25,000 $? per set-up 37,500 machine hours (MH) $? per MH $? per inspection 200 1000 The breakdown between the two products for assigning overheads are as follows: Product No. of Set-ups Sewing 23,500 Inspections 500 Spirit Companion 105 95 14,000 500

North-South Pole Company produces two products, a jacket suitable for adventure-seeking people (Spirit) and a jacket for less-adventurous people (Companion). Production and Sales per year Direct labour 20,000 units (Spirit) & 5,000 units (Companion) 3.5 hours per unit (both) $32.00 per hour $285,000 $180 per unit (both) Direct labour cost Estimated annual manufacturing overhead Direct materials Breakdown of overhead rates Activity Based Overhead Rates Estimated Expected Use of Cost Drivers per Activity Activity Cost Pools Overhead Machine set-up Sewing Inspection $ 40,000 $135,000 $ 25,000 $? per set-up 37,500 machine hours (MH) $? per MH $? per inspection 200 1000 The breakdown between the two products for assigning overheads are as follows: Product No. of Set-ups Sewing 23,500 Inspections 500 Spirit Companion 105 95 14,000 500

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 30P: Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following...
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From the following information, calculate the unit costs for “Spirit” and “Companion” using both the traditional method of costing (i.e. manufacturing overhead rate is based on units produced), and Activity based Costing.

North-South Pole Company produces two products, a jacket suitable for adventure-seeking people (Spirit) and a jacket for less-adventurous people (Companion). Production and Sales per year 20,000 units (Spirit) & 5,000 units (Companion) 3.5 hours per unit (both) $32.00 per hour $285,000 $180 per unit (both) Direct labour Direct labour cost Estimated annual manufacturing overhead Direct materials Breakdown of overhead rates Activity Based Overhead Rates Activity Cost Pools Estimated Expected Use of Cost Drivers Overhead per Activity Machine set-up Sewing Inspection $ 40,000 $135,000 37,500 machine hours (MH) $ 25,000 $? per set-up $? per MH $? per inspection 200 1000 The breakdown between the two products for assigning overheads are as follows: Product No. of Set-ups Inspections Spirit Companion Sewing 23,500 14,000 105 500 95 500
Transcribed Image Text:North-South Pole Company produces two products, a jacket suitable for adventure-seeking people (Spirit) and a jacket for less-adventurous people (Companion). Production and Sales per year 20,000 units (Spirit) & 5,000 units (Companion) 3.5 hours per unit (both) $32.00 per hour $285,000 $180 per unit (both) Direct labour Direct labour cost Estimated annual manufacturing overhead Direct materials Breakdown of overhead rates Activity Based Overhead Rates Activity Cost Pools Estimated Expected Use of Cost Drivers Overhead per Activity Machine set-up Sewing Inspection $ 40,000 $135,000 37,500 machine hours (MH) $ 25,000 $? per set-up $? per MH $? per inspection 200 1000 The breakdown between the two products for assigning overheads are as follows: Product No. of Set-ups Inspections Spirit Companion Sewing 23,500 14,000 105 500 95 500
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