Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
3-498
217. Hammer, Inc., manufactures and sells two products: Product W7 and Product I5. 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 W7 400 5.0 2,000
Product I5 500 2.0 1,000
Total direct labor-hours 3,000
The direct labor rate is $27.10 per DLH. The direct materials cost per unit for each product is
given below:
Direct Materials Cost per Unit
Product W7 $233.10
Product I5 $209.90
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 W7
Product I5
Total
Labor-related DLH $123,810 2,000 1,000 3,000
Production orders Orders 22,178 600 700 1,300
General factory MHs 359,920 4,500 4,300 8,800
$505,908
Required:
What is the difference between the unit product costs under the under the traditional costing
method and the activity-based costing system for each of the two products?
3-499
3-503
218. Uson, Inc., manufactures and sells two products: Product Z2 and Product H9. 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 Z2 300 6.0 1,800
Product H9 200 8.0 1,600
Total direct labor-hours 3,400
The direct labor rate is $18.80 per DLH. The direct materials cost per unit for each product is
given below:
Direct Materials Cost per Unit
Product Z2 $267.00
Product H9 $287.30
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 Z2
Product H9
Total
Labor-related DLHs $71,570 1,800 1,600 3,400
Production orders Orders 38,580 300 200 500
General factory MHs 97,812 3,700 3,900 7,600
$207,962
3-504
Required:
In all computations involving dollars in the following requirements, round off your answer to the
nearest whole cent.
a. Determine the unit product cost of each product under the company's traditional costing
method.
b. Determine the unit product cost of each product under the activity-based costing method.
3-507
219. Garhart Corporation uses the following activity rates from its activity-based costing to
assign overhead costs to products.
Activity Cost Pools Activity Rate
Setting up batches $28.37 per batch
Assembling products $5.83 per assembly hour
Processing customer orders $81.73 per customer order
Data concerning two products appear below:
Product R57J Product W17B
Number of batches 24 34
Number of assembly hours 577 515
Number of customer orders 21 29
Required:
a. How much overhead cost would be assigned to Product R57J using the company's activity-
based costing system? Show your work!
b. How much overhead cost would be assigned to Product W17B using the company's activity-
based costing system? Show your work!
220. Mouret Corporation uses the following activity rates from its activity-based costing to
assign overhead costs to products.
Activity Cost Pools Activity Rate
Setting up batches $92.68 per batch
Processing customer orders $95.08 per customer order
Assembling products $3.41 per assembly hour
Last year, Product N79A required 28 batches, 6 customer orders, and 712 assembly hours.
Required:
How much overhead cost would be assigned to Product N79A using the company's activity-
based costing system? Show your work!
221. Villeda Corporation uses the following activity rates from its activity-based costing to
assign overhead costs to products.
Activity Cost Pools Activity Rate
Setting up batches $34.47 per batch
Processing customer orders $66.77 per customer order
Assembling products $2.66 per assembly hour
Data concerning two products appear below:
Product G32H Product U15Z
Number of batches 79 48
Number of customer orders 36 31
Number of assembly hours 487 417
Required:
How much overhead cost would be assigned to each of the two products using the company's
activity-based costing system?
