Question 3Ghaz Company produces two types of sound units: Deluxe and Regular. Activity data is asfollows:Activity Usage MeasuresUnits produced per yearPrime costProduct-Costing DataDeluxe5,000RM39,000Regular50,000Total55,000RM408,000RM369,000Direct labor hoursMachines hours5,00045,00050,00010,00090,000100,000Production runsNumber of moves101512060180Activity Cost Data (Overhead Activities)ActivityCost (RM)Activity driverProduction runsSetupsMaterials handlingPower60,00030,000Number of moves50,000Machines hoursTestingTotal40,000Direct labor hours180,000Required:a) Calculate the consumption ratios for each activity.b) Choose group activity based on the consumption ratios.c) Calculate a rate for each pooled group of activities.d) Calculate unit product costs using the pool rates.

ABC costing is a method where cost is allocated based on activity. It does not uses single overhead…

Question 3 Ghaz Company produces two types of sound units: Deluxe and Regular. Activity data is as follows: Activity Usage Measures Units produced per year Prime cost Product-Costing Data Regular 50,000 Deluxe Total 5,000 55,000 RM39,000 5,000 10,000 10 RM369,000 RM408,000 Direct labor hours 45,000 50,000 100,000 15 Machines hours 90,000 Production runs 5 Number of moves 120 60 180 Activity Cost Data (Overhead Activities) Cost (RM) Activity driver Production runs Activity Setups Materials handling 60,000 30,000 Number of moves Power 50,000 Machines hours Direct labor hours Testing Total 40,000 180,000 Required: a) Calculate the consumption ratios for each activity. b) Choose group activity based on the consumption ratios. c) Calculate a rate for each pooled group of activities. d) Calculate unit product costs using the pool rates.

Question 3 Ghaz Company produces two types of sound units: Deluxe and Regular. Activity data is as follows: Activity Usage Measures Units produced per year Prime cost Product-Costing Data Regular 50,000 Deluxe Total 5,000 55,000 RM39,000 5,000 10,000 10 RM369,000 RM408,000 Direct labor hours 45,000 50,000 100,000 15 Machines hours 90,000 Production runs 5 Number of moves 120 60 180 Activity Cost Data (Overhead Activities) Cost (RM) Activity driver Production runs Activity Setups Materials handling 60,000 30,000 Number of moves Power 50,000 Machines hours Direct labor hours Testing Total 40,000 180,000 Required: a) Calculate the consumption ratios for each activity. b) Choose group activity based on the consumption ratios. c) Calculate a rate for each pooled group of activities. d) Calculate unit product costs using the pool rates.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 39E: Cost Classification Loring Company incurred the following costs last year: Required: 1. Classify...

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Cost Classification Loring Company incurred the following costs last year: Required: 1. Classify each of the costs using the following table format. Be sure to total the amounts in each column. Example: Direct materials, 216,000. 2. What was the total product cost for last year? 3. What was the total period cost for last year? 4. If 30,000 units were produced last year, what was the unit product cost?
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