Reference no: EM13858767
Beaver Machine - Activity-Based Costing
Beaver Machine manufactures two (2) types of laptop cases from milled aluminum (for the laptop itself). One is designed for 15.6" screen displays (Power User) and one is designed for 13" screen displays (Mobile User).
Beaver Machine has identified the following cost drivers and their measures:
|
Activity
|
Measure
|
Cost Pool
|
|
Labor-related
|
DLH
|
$60,000
|
|
Machine setups
|
# setups
|
$280,000
|
|
Inventory management
|
# part types
|
$175,000
|
|
Production Orders
|
# orders
|
$65,000
|
|
Material receipts
|
# receipts
|
$72,000
|
|
General factory
|
MH
|
$310,000
|
Beaver Machine has also estimated the level of activity each of their products should consume:
|
Activity
|
Measure
|
Power User
|
Mobile User
|
|
Labor-related
|
DLH
|
42,000
|
12,000
|
|
Machine setups
|
# setups
|
250
|
175
|
|
Inventory management
|
# part types
|
22
|
36
|
|
Production Orders
|
# orders
|
125
|
87
|
|
Material receipts
|
# receipts
|
280
|
225
|
|
General factory
|
MH
|
32,000
|
21,000
|
Using the information provided on the worksheet complete the following items.
1. Calculate the following items for both products using the single predetermined overhead rate (chapter 2):
Direct material per unit Direct labor per unit
Manufacturing overhead allocated per unit Total unit product cost
2. Calculate the sales price per unit for both products using a 35% markup on cost based on the total unit product cost from #1 above.
3. Calculate the following items for both products using activity-based costing (chapter 3):
Direct material per unit Direct labor per unit
Manufacturing overhead allocated per unit Total unit product cost
4. Calculate the sales price per unit for both products using a 35% markup on cost based on the total unit product cost from #3 above.
5. What is the difference in total unit product cost between the two methods of allocating manufacturing overhead?
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