Cost driver: Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product. Activity Based Costing: Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products. Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product. Given information: Machine hours for product M is 25,000 hours Machine hours for product F is 50,000 hours Total machining cost is $375,000. Total machine hours are 75,000 hours. Production runs for product M is 50. Production runs for product F is 50. Total setup costs are $120,000. Inspection hours for product M are 1,000 hours. Inspection hours for product F are 500 hours. Total inspection cost is $105,000.

Question

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Answer 1

Question

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

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Answer 2

Question

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

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Answer 3

Question

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

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Answer 4

Question

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

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Answer 5

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

Answer 6

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

Answer 7

Chapter 5, Problem 5.21E

1.

To determine

Cost driver:

Cost driver is a method of costing to assign the overhead cost of resources to the number of units produced. It is a reason that causes a change in the cost of an activity. It is factor that establishes the relationship between indirect cost, product and activities performed to manufacture that product.

Activity Based Costing:

Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.

Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.

Given information:

Machine hours for product M is 25,000 hours

Machine hours for product F is 50,000 hours

Total machining cost is $375,000.

Total machine hours are 75,000 hours.

Production runs for product M is 50.

Production runs for product F is 50.

Total setup costs are $120,000.

Inspection hours for product M are 1,000 hours.

Inspection hours for product F are 500 hours.

Total inspection cost is $105,000.

Answer 8

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

Answer 9

2.

To determine

To calculate: The manufacturing cost per unit of each product.

Given information:

Direct cost per unit of product M is $4 per unit.

Overhead cost per unit of product is $5.10 per unit.

Direct cost per unit of product F is $4 per unit.

Overhead cost per unit of product is $3.17 per unit.

Direct material cost of product M is $150,000.

Direct manufacturing labor cost of product M is $50,000.

Direct material cost of product F is $300,000.

Direct manufacturing labor cost of product F is $100,000.

Total direct cost of product F is $400,000

Annual production of product F is 100,000 units

Answer 10

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

Answer 11

3.

To determine

To define: The use of new cost information from its activity based costing system to manage its business.

Answer 12

Expert Solution & Answer

Answer 13

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Answer 14

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Answer 15

Ch. 5 - What is broad averaging, and what consequences can...Ch. 5 - Why should managers worry about product...Ch. 5 - What is costing system refinement? Describe three...Ch. 5 - What is an activity-based approach to designing a...Ch. 5 - Describe four levels of a cost hierarchy.Ch. 5 - Why is it important to classify costs into a cost...Ch. 5 - What are the key reasons for product cost...Ch. 5 - Prob. 5.8Q Ch. 5 - Department indirect-cost rates are never...Ch. 5 - Prob. 5.10Q

To define: The use of new cost information from its activity based costing system to manage its business.

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Chapter 5 Solutions