Problem 05-58 Student Name:
Class:
1. Identify at least four general advantages associated with
activity-based costing.
a.
b.
c.
d.
2.
ULTRATECH, INC.
Expected Contribution Margin
Total for
40,000
PC Board Per Unit Units
Revenue * *
Direct material * *
Material-handling charge * *
Direct labor * *
Variable overhead * *
Machine time * *
Total cost * *
Unit contribution margin *
Total contribution margin *
Total for
65,000
TV Board Per Unit Units
Revenue * *
Direct material * *
Material-handling charge * *
Direct labor * *
Variable overhead * *
Machine time * *
Total cost * *
Unit contribution margin *
Total contribution margin *
3.
ULTRATECH, INC.
Pool Rates for Activity-Based Costing
Cost Cost Driver
Procurement * * * per part
Production scheduling * * * per board
Packaging and shipping * * * per board
Machine setup * * * per setup
Hazardous waste disposal * * * per lb.
Quality control * * * per inspection
General supplies * * * per board
Machine insertion * * * per part
Manual insertion * * * per part
Wave-soldering * * * per board
Total for
40,000
PC Board Per Unit Units
Revenue * *
Direct material * *
Procurement * *
Production scheduling * *
Packaging and shipping * *
Machine setup * *
Hazardous waste disposal * *
Quality control * *
General supplies * *
Machine insertion * *
Manual insertion * *
Wave-soldering * *
Total cost * *
Unit contribution margin *
Total contribution margin *
Total for
65,000
TV Board Per Unit Units
Revenue * *
Direct material * *
Procurement * *
Production scheduling * *
Packaging and shipping * *
Machine setup * *
Hazardous waste disposal * *
Quality control * *
General supplies * *
Machine insertion * *
Manual insertion * *
Wave-soldering * *
Total cost * *
Unit contribution margin *
Total contribution margin *
4. Explain how a comparison of the results of the two costing
methods may impact decisions made by Ultratech’s
management group.
Problem 05-58 Student Name:
Class:
1. Identify at least four general advantages associated with
activity-based costing.
a.
b.
2.
ULTRATECH, INC.
Expected Contribution Margin
Total for
40,000
PC Board Per Unit Units
Revenue 600$ 24,000,000$
Direct material 280$ 11,200,000$
Total for
65,000
TV Board Per Unit Units
Revenue 300$ 19,500,000$
Direct material 160$ 10,400,000$
3.
ULTRATECH, INC.
Pool Rates for Activity-Based Costing
Cost Cost Driver
Procurement 800,000$ 4,000,000 0.20$ per part
Instructor
McGraw-Hill Irwin
c.
d.
Total for
40,000
PC Board Per Unit Units
Revenue 600.00$ 24,000,000$
Direct material 280.00$ 11,200,000$
Total for
65,000
TV Board Per Unit Units
Revenue 300.00$ 19,500,000$
Direct material 160.00$ 10,400,000$
4. Explain how a comparison of the results of the two costing
methods may impact decisions made by Ultratech’s
management group.
The analysis using the previously reported costs indicates that the unit contribution of the PC board is almost
double that of the TV board. On this basis, management is likely to accept the suggestion of the production