C2 - Please solve all sub-part questions with all steps. Thanks XYZ Electronics manufactures two large-screen smart television models: the Elite which sellsfor OMR 160 and a new model, the Superior, which sells for OMR 130. Annual production is 2000units for the Elite and 8000 units for the Superior.The company's managers identified five activity cost pools and related cost drivers and accumulatedoverhead by cost pool as follows.Cost DriverEstimated OverheadCostExpected Use of Cost DriverPer TelevisionActivityExpected Use ofCost DriversEliteSuperior2Material handlingMachine setupsQuality inspectionsQuality controlNumber of requisitions 135,000 OMR127,500 OMRNumber of inspections 127,000 OMR|Number of inspections 189,500 OMRSupervising production Number of supervisors 120,000 OMR31Number of setups52310418126190009,00010,000Requirements:3. Compute the overhead cost per unit for each product.4. Comment on the comparative overhead cost per unit.

Overhead means all indirect costs incurred in the manufacturing or selling of products. Under…

XYZ Electronics manufactures two large-screen smart television models: the Elite which sells for OMR 160 and a new model, the Superior, which sells for OMR 130. Annual production is 2000 units for the Elite and 8000 units for the Superior. The company's managers identified five activity cost pools and related cost drivers and accumulated overhead by cost pool as follows. Activity Cost Driver Estimated Overhead Cost Expected Use of Cost Drivers Expected Use of Cost Driver Per Television Elite Superior 2 Material handling Machine setups Quality inspections Quality control |Number of requisitions 135,000 OMR 127,500 OMR Number of inspections 127,000 OMR |Number of inspections 189,500 OMR Supervising production |Number of supervisors 120,000 OMR 3 1 |Number of setups 2 3 10 18 12 19000 9,000 10,000 Requirements: 3. Compute the overhead cost per unit for each product. 4. Comment on the comparative overhead cost per unit.

XYZ Electronics manufactures two large-screen smart television models: the Elite which sells for OMR 160 and a new model, the Superior, which sells for OMR 130. Annual production is 2000 units for the Elite and 8000 units for the Superior. The company's managers identified five activity cost pools and related cost drivers and accumulated overhead by cost pool as follows. Activity Cost Driver Estimated Overhead Cost Expected Use of Cost Drivers Expected Use of Cost Driver Per Television Elite Superior 2 Material handling Machine setups Quality inspections Quality control |Number of requisitions 135,000 OMR 127,500 OMR Number of inspections 127,000 OMR |Number of inspections 189,500 OMR Supervising production |Number of supervisors 120,000 OMR 3 1 |Number of setups 2 3 10 18 12 19000 9,000 10,000 Requirements: 3. Compute the overhead cost per unit for each product. 4. Comment on the comparative overhead cost per unit.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 13EB: Stacks manufactures two different levels of hockey sticks: the Standard and the Slap Shot. The total...

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Medical Tape makes two products: Generic and Label. It estimates it will produce 423,694 units of Generic and 652,200 of Label, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: How much is the overhead allocated to each unit of Generic and Label?
Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Silven produces two models of cell phones with the following expected activity demands: Required: 1. Calculate the global consumption ratios for the two products. 2. Using the activity consumption ratios for number of orders and number of setups, show that the same cost assignment can be achieved using these two drivers as that of the complete, four-driver ABC system.
Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Silven produces two models of cell phones with the following expected activity demands: 1. Determine the total overhead assigned to each product using the four activity drivers. 2. Determine the total overhead assigned to each model using the two most expensive activities. The costs of the two relatively inexpensive activities are allocated to the two expensive activities in proportion to their costs. 3. Using ABC as the benchmark, calculate the percentage error and comment on the accuracy of the reduced system. Explain why this approach may be desirable.
Carltons Kitchens makes two types of pasta makers: Strands and Shapes. The company expects to manufacture 70,000 units of Strands, which has a per-unit direct material cost of $10 and a per-unit direct labor cost of $60. It also expects to manufacture 30.000 units of Shapes, which has a per-unit material cost of $15 and a per-unit direct labor cost of $40. It is estimated that Strands will use 140,000 machine hours and Shapes will require 60,000 machine hours. Historically, the company has used the traditional allocation method and applied overhead at a rate of $21 per machine hour. It was determined that there were three cost pools, and the overhead for each cost pool is shown: The cost driver for each cost pool and its expected activity is shown: A. What is the per-unit cost for each product under the traditional allocation method? B. What is the per-unit cost for each product under ABC costing?
Young Company is beginning operations and is considering three alternatives to allocate manufacturing overhead to individual units produced. Young can use a plantwide rate, departmental rates, or activity-based costing. Young will produce many types of products in its single plant, and not all products will be processed through all departments. In which one of the following independent situations would reported net income for the first year be the same regardless of which overhead allocation method had been selected? a. All production costs approach those costs that were budgeted. b. The sales mix does not vary from the mix that was budgeted. c. All manufacturing overhead is a fixed cost. d. All ending inventory balances are zero.
Pinter Company had the following environmental activities and product information: 1. Environmental activity costs 2. Driver data 3. Other production data Required: 1. Calculate the activity rates that will be used to assign environmental costs to products. 2. Determine the unit environmental and unit costs of each product using ABC. 3. What if the design costs increased to 360,000 and the cost of toxic waste decreased to 750,000? Assume that Solvent Y uses 6,000 out of 12,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 14,250 of 15,000 pounds of toxic waste. What is the new environmental cost for Solvent Y?
Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?
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The chief executive officer of Acadia, Inc. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Acadia, Inc. be used to prepare comparative statements using variable costing and the companys absorption costing. The data follow: The factory produced 80,000 units during the period, and 70,000 units were sold for 700,000. 1. Prepare an income statement using variable costing. 2. Prepare an income statement using absorption costing. (Round unit costs to three decimal places.)
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