Reference no: EM132908707
Question - Barcos Belem manufactures tractors John Deere and TAFE-and applies manufacturing overhead to all units at the rate of $80 per machine hour. Production information follows
John Deere TAFE
Direct Material cost $40 $65
Direct Labor cost $25 $25
Budgeted Volume(units) 16,000 30,000
The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities' three respective cost drivers, follows
John Deere TAFE
Total No. of Setups 100.00 60.00 160.00
Machine Hours 32000.00 45000.00 77000.00
Outgoing Shipments 200 150 350
The firm's total overhead of $6,160,000 is subdivided as follows: manufacturing setups, $1,344,000; machine processing, $3,696,000; and product shipping, $1,120,000
Required - Compute the unit manufacturing cost of John Deere and TAFE Tractors by using the company's current overhead costing procedure. And the unit manufacturing cost of John Deere and TAFE Tractors by using activity-based costing
Calculate the aggregate amount by which the John Deere cabinet line is under-costed by the company's current traditional overhead costing procedures. Then calculate the aggregate amount by which the traditional system over-costs the TAFE cabinet line.
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