Cosgrove company manufactures two products product k-7 and

Reference no: EM13378629

Cosgrove Company manufactures two products, Product K-7 and Product L-15. Product L-15 is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product K-7. Product L-15 is the more complex of the two products, requiring 2.0 hours of direct labor time per unit to manufacture compared to 1.0 hour of direct labor time for Product K-7. Product L-15 is produced on an automated production line.

Overhead currently is applied to the products on the basis of direct labor-hours. The company estimated it would incur $510,000 in manufacturing overhead costs and produce 10,000 units of Product L-15 and 40,000 units of Product K- 7 during the current year.

Unit costs for materials and labor are:

419_Compute the predetermined overhead rate under the current method.png

Required:

a. Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year.

b. The company is considering the use of activity-based costing as an alternative to its traditional costing method for manufacturing overhead. Data relating to the company's activity cost pools for the current year are given below:

352_Compute the predetermined overhead rate under the current method1.png

Using the data above, determine the unit product cost of each product for the current year.

c. What items of overhead cost make Product L-15 so costly to produce according to the activity-based costing system? What influence might the activity-based costing data have on management's opinions regarding the profitability of Product L-15?

Reference no: EM13378629

Questions Cloud

Transform financial statements from barclays bank group : transform financial statements from barclays bank group limited to an xbrl gaap or ifrsinstance document. provide a

Ws the amount of property and equipment on the : what is the amount of property and equipment on the balance sheet for the two most recent years? what is the

Two individuals chip and holly are stranded on an island : two individuals chip and holly are stranded on an island. the island has plenty of vegetation. chip and holly can spend

In the 1990s five firms supplied amateur color film in the : in the 1990s five firms supplied amateur color film in the united states kodak fuji konica agfa and 3m. from a

Cosgrove company manufactures two products product k-7 and : cosgrove company manufactures two products product k-7 and product l-15. product l-15 is of fairly recent origin having

Suppose that ex is the exchange rate between the us dollar : suppose that ex is the exchange rate between the u.s. dollar and the chinese yuan in that ex indicates the number of

In a large hat you have three blue four red and five purple : in a large hat you have three blue four red and five purple marbles. you pick three marvles from this hat without

A paint factory produces paints but in the process : a paint factory produces paints but in the process transmits chemicals into the soil below the factory. these chemicals

Babb company is a manufacturing firm that uses job-order : babb company is a manufacturing firm that uses job-order costing. the companys inventory balances were as follows at

User Account

All Pages