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Zhedong Electronics Company in Hangzhou, China, plans to use activity-based costing to determine its product costs. It presently uses a single plantwide factory overhead rate for allocating factory overhead to products, based on direct labor hours. The total factory overhead cost is as follows (currency unit in Chinese RMB, \): Department Factory Overhead Production Support Production (factory overhead only) Total cost ¥1,225,000 175,000 ¥1,400,000 The company determined that it performed four major activities in the Production Support Department. The budgeted activity costs are as follows: Production Support Department Budgeted Activity Cost *428,750 245,000 183,750 367,500 ¥1,225,000 Setup Production control Quality control Materials management Total Zhedong estimated the following activity-base usage and units produced for each of its three products: Number of Direct Production Material Products Labor Hrs. Setups Orders Requisitions Units Inspections LCD TV... Tablet.... Smartphone.. 10,000 25,000 80 80 35 320 2,000 10,000 40 40 40 400 50,000 62,000 140,000 175,000 5 125 30 Total cost 125 75 750 Instructions 1. Determine the factory overhead cost per unit for the LCD TV, tablet, and smartphone under the single plantwide factory overhead rate method. Use direct labor hours as the activity base.

Zhedong Electronics Company in Hangzhou, China, plans to use activity-based costing to determine its product costs. It presently uses a single plantwide factory overhead rate for allocating factory overhead to products, based on direct labor hours. The total factory overhead cost is as follows (currency unit in Chinese RMB, \): Department Factory Overhead Production Support Production (factory overhead only) Total cost ¥1,225,000 175,000 ¥1,400,000 The company determined that it performed four major activities in the Production Support Department. The budgeted activity costs are as follows: Production Support Department Budgeted Activity Cost *428,750 245,000 183,750 367,500 ¥1,225,000 Setup Production control Quality control Materials management Total Zhedong estimated the following activity-base usage and units produced for each of its three products: Number of Direct Production Material Products Labor Hrs. Setups Orders Requisitions Units Inspections LCD TV... Tablet.... Smartphone.. 10,000 25,000 80 80 35 320 2,000 10,000 40 40 40 400 50,000 62,000 140,000 175,000 5 125 30 Total cost 125 75 750 Instructions 1. Determine the factory overhead cost per unit for the LCD TV, tablet, and smartphone under the single plantwide factory overhead rate method. Use direct labor hours as the activity base.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 15E: Activity-based costing and product cost distortion The management of Four Finger Appliance Company...
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Zhedong Electronics Company in Hangzhou, China, plans to use activity-based costing to determine its product costs. It presently uses a single plantwide factory overhead rate for allocating factory overhead to products, based on direct labor hours. The total factory overhead cost is as follows (currency unit in Chinese RMB, ¥): Department Factory Overhead Production Support Production (factory overhead only) Total cost ¥1,225,000 175,000 ¥1,400,000 The company determined that it performed four major activities in the Production Support Department. The budgeted activity costs are as follows: Production Support Department Budgeted Activity Cost Setup Production control *428,750 245,000 183,750 367,500 ¥1,225,000 Quality control Materials management Total Zhedong estimated the following activity-base usage and units produced for each of its three products: Number of Direct Production Material Products Units Labor Hrs. Setups Orders Inspections Requisitions LCD TV.. 10,000 2,000 50,000 62,000 25,000 80 80 35 320 Tablet... 10,000 40 40 40 400 Smartphone.. Total cost. 140,000 5 30 175,000 125 125 75 750 Instructions 1. Determine the factory overhead cost per unit for the LCD TV, tablet, and smartphone under the single plantwide factory overhead rate method. Use direct labor hours as the activity base.
Transcribed Image Text:Zhedong Electronics Company in Hangzhou, China, plans to use activity-based costing to determine its product costs. It presently uses a single plantwide factory overhead rate for allocating factory overhead to products, based on direct labor hours. The total factory overhead cost is as follows (currency unit in Chinese RMB, ¥): Department Factory Overhead Production Support Production (factory overhead only) Total cost ¥1,225,000 175,000 ¥1,400,000 The company determined that it performed four major activities in the Production Support Department. The budgeted activity costs are as follows: Production Support Department Budgeted Activity Cost Setup Production control *428,750 245,000 183,750 367,500 ¥1,225,000 Quality control Materials management Total Zhedong estimated the following activity-base usage and units produced for each of its three products: Number of Direct Production Material Products Units Labor Hrs. Setups Orders Inspections Requisitions LCD TV.. 10,000 2,000 50,000 62,000 25,000 80 80 35 320 Tablet... 10,000 40 40 40 400 Smartphone.. Total cost. 140,000 5 30 175,000 125 125 75 750 Instructions 1. Determine the factory overhead cost per unit for the LCD TV, tablet, and smartphone under the single plantwide factory overhead rate method. Use direct labor hours as the activity base.
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