Connect Managerial Accounting Chapter 17 Assignment

Q1. Rafner Manufacturing identified the following budgeted data in its two production departments

	Assembly	Finishing
Manufacturing overhead costs	$1,297,500	$700,000
Direct labor hours	13,000 DLH	21,000 DLH
Machine hours	7,000 MH	17,000 MH

Q2. Rafner Manufacturing identified the following budgeted data in its two production departments.

	Assembly	Finishing
Manufacturing overhead costs	$1,297,500	$700,000
Direct labor hours	13,000 DLH	21,000 DLH
Machine hours	7,000 MH	17,000 MH

Q3. A manufacturer uses activity-based costing to assign overhead costs to products. Budgeted cost information for selected activities for next year follows.

Activity	Expected Cost	Cost Driver	Expected Usage of Cost Driver
Purchasing	$220,000	Purchase orders	5,500	purchase orders
Cleaning factory	37,000	Square feet	6,000	square feet
Providing utilities	85,400	Square feet	6,000	square feet

Compute activity rates for each of the cost pools. (Round your answers to 2 decimal places.)

Q4. Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: Deluxe and Basic.

Activity	Expected Costs			Expected Activity
Handling materials		$715,000			100,000	parts
Inspecting product		990,000			1,500	batches
Processing purchase orders		195,000			700	orders
Paying suppliers		265,000			500	invoices
Insuring the factory		390,000			40,000	square feet
Designing packaging		165,000			2	models

Compute the activity rate for each activity, assuming the company uses activity-based costing. (Round activity rate answers to 2 decimal places.)

Q5. Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: Deluxe and Basic.

Activity	Expected Costs	Expected Activity
Handling materials	$700,000	100,000 parts
Inspecting product	975,000	1,500 batches
Processing purchase orders	180,000	700 orders
Paying suppliers	250,000	500 invoices
Insuring the factory	375,000	40,000 square feet
Designing packaging	150,000	2 models

Assume that the following information is available for the company’s two products for the first quarter of this year.

	Deluxe Model		Basic Model
Production volume	10,000	units	30,000	units
Parts required	20,000	parts	30,000	parts
Batches made	250	batches	100	batches
Purchase orders	50	orders	20	orders
Invoices	50	invoices	10	invoices
Space occupied	10,000	sq. ft.	7,000	sq. ft
Models	1	model	1	model

Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model? (Round activity rate and average OH cost per unit answers to 2 decimal places.)

Q6. Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and round “Cost per unit and OH rate” answers to 2 decimal places.)

Process	Activity	Overhead Cost				Driver	Quantity
Components	Changeover		$	500,000		Number of batches	800
	Machining			279,000		Machine hours	6,000
	Setups			225,000		Number of setups	120
			$	1,004,000
Finishing	Welding		$	180,300		Welding hours	3,000
	Inspecting			210,000		Number of inspections	700
	Rework			75,000		Rework orders	300
			$	465,300
Support	Purchasing		$	135,000		Purchase orders	450
	Providing space			32,000		Number of units	5,000
	Providing utilities			65,000		Number of units	5,000
			$	232,000

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,500			3,500
Welding hours		800			2,200
Batches		400			400
Number of inspections		400			300
Machine hours		1,800			4,200
Setups		60			60
Rework orders		160			140
Purchase orders		300			150

Q7. Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.

Process	Activity	Overhead Cost				Driver	Quantity
Components	Changeover		$	500,000		Number of batches	800
	Machining			279,000		Machine hours	6,000
	Setups			225,000		Number of setups	120
			$	1,004,000
Finishing	Welding		$	180,300		Welding hours	3,000
	Inspecting			210,000		Number of inspections	700
	Rework			75,000		Rework orders	300
			$	465,300
Support	Purchasing		$	135,000		Purchase orders	450
	Providing space			32,000		Number of units	5,000
	Providing utilities			65,000		Number of units	5,000
			$	232,000

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,500			3,500
Welding hours		800			2,200
Batches		400			400
Number of inspections		400			300
Machine hours		1,800			4,200
Setups		60			60
Rework orders		160			140
Purchase orders		300			150

Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders.

Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212.

If the market price for Model 145 is $820 and the market price for Model 212 is $480, determine the profit or loss per unit for each model.

Q8. Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.

Process	Activity	Overhead Cost				Driver	Quantity
Components	Changeover		$	500,000		Number of batches	800
	Machining			279,000		Machine hours	6,000
	Setups			225,000		Number of setups	120
			$	1,004,000
Finishing	Welding		$	180,300		Welding hours	3,000
	Inspecting			210,000		Number of inspections	700
	Rework			75,000		Rework orders	300
			$	465,300
Support	Purchasing		$	135,000		Purchase orders	450
	Providing space			32,000		Number of units	5,000
	Providing utilities			65,000		Number of units	5,000
			$	232,000

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,500			3,500
Welding hours		800			2,200
Batches		400			400
Number of inspections		400			300
Machine hours		1,800			4,200
Setups		60			60
Rework orders		160			140
Purchase orders		300			150

Using ABC, compute the overhead cost per unit for each product line.

Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212.

If the market price for Model 145 is $820 and the market price for Model 212 is $480, determine the profit or loss per unit for each model.

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