Determine the total cost by product and unit cost

Assignment Help Managerial Accounting
Reference no: EM131123520

Ms. Fluffy Flaxoil, the president, has heard that using Activity-Based Costing overhead allocations might give her more accurate product costing. And Fluffy loves to be accurate almost as much as she loves to be fit, trim and rich. Right now they just use a traditional, Single-Rate, overhead allocation system based on machine hours. Below are some of the cost and activity information that a consultant has provided the firm to consider in deciding whether to switch to ABC.

Background: The Company made 2,000 Mucho-Dinero exercisers and 9,000 Dumpy in 2012. The Mucho-Dinero uses 5 machine hours, 1.5 hours of inspection time, + hour of equipment maintenance, and 4 direct labor hours to make. The Dumpy uses 3 hours of machine time, 1 hour of inspection, i hour of equipment maintenance and 2 hours of direct labor to manufacture. Estimated overhead costs and related 2012 data follow:

(Assume there are the only overhead costs)

Overhead Area Cost Driver Estimated costs Estimated Activity
Assembly Machine hours $540,000 36,000 hours
Quality Control Inspector labor hours $150,000 5,000 hours
Equip. Maintenance Maintenance hours $240,000 4,000 hours
All other overhead Direct labor hours $600,000 60,000 hours

Required: What is the overhead cost that would be assigned to each product (Mucho-Dinero & Dumpy) for each of the two products?

a) Using Activity-based costing methods determine the total cost by product and unit cost for each.

b) If they used the traditional, single-driver method, what would be the rate based on the above information.

Reference no: EM131123520

Previous Q& A

  Calculate the net present value and return on investment

Consider the situation you addressed in Prob- lem and Exercise 3. Create numeric cost esti- mates for each of the costs you listed. Calculate the net present value and return on investment. Include a break-even analysis. As- sume a 10 percent disc..

  Presented to help you develop a strong outline

Begin by filling in the document attached - replace highlighted text that is presented to help you develop a strong outline with requested content

  A professional document of particularly coherent

Find a professional document that strikes you as being particularly coherent, such as a professional website, a class lecture, a set of instructions, or a memo you received at work.

  What advantages integration afford intermountain healthcare

Consider the example above. What advantages does integration afford Intermountain Healthcare? Do other integrated health systems experience similar benefits? Are there disadvantages to integration? If so, what are they?

  What red flags that indicate that financial statement fraud

What are two of the red flags that indicate that financial statement fraud may be occurring (try to choose two that have not already been identified)?

  What is the probability that a randomly selected tire

What is the probability that a randomly selected tire has a diameter below

  Rework problem 1 based on the assumption

Rework Problem 1 based on the assumption that, because of an unexpected order, PDC’s sales are forecasted to be $160,000 for September 2011.

  What rate is the containment area shrinking

If the boom is pulled in at the rate of 5 m/min, at what rate is the containment area shrinking when it has a diameter of 100m?

  Prepare a cash budget for august 2011 for pdc and describe

A. Prepare PDC’s sales schedule, purchases schedule, and wages schedule for August 2011. B. Prepare a cash budget for August 2011 for PDC and describe how the forecast affects the end-of-month cash balance.

  Examine the linkage between emotional intelligence

In this assignment, you will use the article below to examine the linkage between Emotional Intelligence (EI) and Transformational Leadership. You will also analyze the impact of a leader's emotional intelligence on transformational leadership. La..


Write a Review


Similar Q& A

  Discuss the importance of capacity planning in deciding

Discuss the importance of capacity planning in deciding on the number of police officers or fire trucks to have on duty at a given time.

  As an eec corporate business financial analyst you must

as an eec corporate business financial analyst you must have an expert understanding of the various costing methods.

  What amount of cash was paid to suppliers of inventory

What amount of cash was paid to suppliers of inventory, assuming all accounts payable related to inventory purchases?

  Evaluate performance and control cost

As a production manager, one of your main tasks is to enhance efficiencies by either increasing productivity or reducing cost. Find out whether the responsibility reports required to track performance should be created by department, function, or ..

  What is the expected value of perfect information

A member of a group of medical practitioners is considering opening his own private medical practice. He estimates that if demand for his services is high he could realise a profit of $500,000. If demand is low he could lose $200,000.

  Information on the company production activities

Prescott Company's predetermined overhead rate is 200% of direct labor. Information on the company's production activities during September 2013 follows.

  Equivalent units-costing methods-cvp

For what is cost-volume-profit (CVP) analysis used? What are some of the key underlying assumptions that make CVP analysis useful for decision makers? Why might decision makers use CVP analysis?

  Describe what nmc should do to improve its position

Compare your results to the industry ratios and describe what NMC should do to improve its position in the market.

  What were the standard hours allowed for the year

Compute the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.

  Declared the dividend on the preferred stock

Organize the transaction data in accounts under an accounting equation. Prepare the stockholders equity section of the balance sheet at December 31, 2012.

  Determining cvp analysis

JungleGym, a best-selling toy has a selling price of $15. If the contribution margin ratio is 40% and if the fixed costs are $60,000, how many JungleGyms must the company sell to realize a profit of $450,000?

  Compute the break-even point and total monthly fixed costs

Compute the break-even point in units and dollars and determine the variable cost per haircut and the total monthly fixed costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd