Determine the unit product cost of each product under the activity-based costing
method.
Computation of activity rates:
(a)
(b)
3-706
198.
Dace Company manufactures two products, Product F and Product G. The company
expects to produce and sell 3,200 units of Product F and 2,100 units of Product G during
the current year. Data relating to the company’s three activity cost pools are given below
for the current year:
Estimated
Expected Activity
Activity Cost Pool
Overhead Cost
Product F
Product G
Total
Machine setups
$7,020
130
setups
130
setups
260
setups
Purchase orders
$69,700
520
orders
1,180
orders
1,700
orders
General factory
$101,160
3,520
hours
2,100
hours
5,620
hours
Required:
Using the activity-based costing approach, determine the overhead cost per unit for each
product.
The activity rates for each activity cost pool are computed as follows:
3-707
3-708
3-709
199.
Luckado, Inc., manufactures and sells two products: Product O5 and Product F4. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product O5
500
9.0
4,500
Product F4
800
7.0
5,600
Total direct labor-
hours
10,100
The direct labor rate is $18.10 per DLH. The direct materials cost per unit is $164.00 for
Product O5 and $139.80 for Product F4.
The company has an activity-based costing system with the following activity cost pools,
activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product O5
Product F4
Total
Labor-related
DLHs
$113,322
4,500
5,600
10,100
Machine setups
Setups
63,558
600
500
1,100
General factory
MHs
502,227
4,800
5,100
9,900
$679,107
Required:
Determine the unit product cost of each product under the activity-based costing
method.
3-712
3-713
200.
Meiler, Inc., manufactures and sells two products: Product T6 and Product U1. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product T6
400
9.0
3,600
Product U1
100
7.0
700
Total direct labor-
hours
4,300
The direct labor rate is $15.90 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost
per Unit
Product T6
$154.10
Product U1
$241.20
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product T6
Product U1
Total
Labor-related
DLHs
$148,995
3,600
700
4,300
Production orders
Orders
53,811
500
400
900
General factory
MHs
488,992
3,600
3,800
7,400
$691,798
Required:
3-714
In all computations involving dollars in the following requirements, round off your answer
to the nearest whole cent.
a. Compute the activity rates under the activity-based costing system.
b. Determine how much overhead would be assigned to each product under the activity-
based costing system.
c. Determine the unit product cost of each product under the activity-based costing
method.
3-717
201.
Vivino, Inc., manufactures and sells two products: Product T3 and Product J4. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product T3
700
9.0
6,300
Product J4
1,000
7.0
7,000
Total direct labor-
hours
13,300
The direct labor rate is $24.80 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost
per Unit
Product T3
$161.30
Product J4
$277.80
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product T3
Product J4
Total
Labor-related
DLHs
$394,877
6,300
7,000
13,300
Machine setups
Setups
22,716
500
400
900
General factory
MHs
454,480
4,700
4,800
9,500
$872,073
3-718
Required:
In all computations involving dollars in the following requirements, round off your answer
to the nearest whole cent.
a. Compute the activity rates under the activity-based costing system.
b. Determine how much overhead would be assigned to each product under the activity-
based costing system.
c. Determine the unit product cost of each product under the activity-based costing
method.
3-720
3-721
202.
Klasinski, Inc., manufactures and sells two products: Product C2 and Product V1. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product C2
100
5.0
500
Product V1
200
3.0
600
Total direct labor-
hours
1,100
The direct labor rate is $26.40 per DLH. The direct materials cost per unit is $106.80 for
Product C2 and $131.40 for Product V1.
The company has an activity-based costing system with the following activity cost pools,
activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product C2
Product V1
Total
Labor-related
DLHs
$30,184
500
600
1,100
Product testing
Tests
11,564
300
400
700
General factory
MHs
814,815
4,600
4,900
9,500
$856,563
Required:
Determine the unit product cost of each product under the activity-based costing
method.
3-722
Computation of activity rates: