Reference no: EM133578719
Assignment
Case 1
Super Tools Pty Ltd has five activity cost pools and two products. It expects to produce 200,000 units of its automobile scissors jack and 80,000 units of its truck hydraulic jack. Having identified its activity cost pools and the cost drivers for each cost pool, Super tools Pty Ltd accumulated the following data relative to those activity cost pools and cost drivers.
Annual overhead data
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Activity cost pools
|
Cost drivers
|
Estimated overhead
|
|
Ordering and receiving
|
Purchase orders
|
$200,000
|
|
Machine setup
|
Setups
|
$600,000
|
|
Machining
|
Machine hours
|
$2,000,000
|
|
Assembling
|
Parts
|
$1,800,000
|
|
Inspecting and testing
|
Tests
|
$700,000
|
|
|
Total
|
$5,300,000
|
Expected use of cost drivers per product
|
Expected use of cost driver per activity
|
Scissors Jacks
|
Hydraulic Jacks
|
|
2,500 orders
|
1,000
|
1,500
|
|
1,200 orders
|
500
|
700
|
|
800,000 hours
|
300,000
|
500,000
|
|
3,000,000 parts
|
1,800,000
|
1,200,000
|
|
35,000 tests
|
20,000
|
15,000
|
Using the above data, do the following
a) Prepare a schedule showing the computation of the activity-based costing overhead rate per cost driver.
b) Prepare a schedule assigning each activity's overhead cost to the two products.
c) Compute and describe the overhead cost per unit for each product.
d) Explain the comparative overhead cost per unit.
Case 2
Redfern Bicycles International Pty Ltd produces and sells three different types of mountain bikes. Information regarding the three models is shown below.
|
|
Cross country (XC)
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Trail Bike (TB)
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Downhill (DH)
|
Total
|
|
Unit sold
|
5,000 units
|
10,000 units
|
25,000 units
|
40,000 units
|
|
Selling price
|
$800
|
$500
|
$350
|
|
|
Variable cost
|
$500
|
$300
|
$250
|
|
The company's total fixed costs to produce the bicycles are $7,500,000.
a) Determine and explain the sales mix as a function of units sold for the three products.
b) Determine and explain the weighted-average unit contribution margin.
c) Determine and explain the total number of units that the company must produce to break even.
d) Determine and explain the number of units of each model that the company must produce to break even.
Case 3
IMC Pty Ltd produces plastic ice cube trays in two processes: heating and stamping. All materials are added at the beginning of the Heating Department process, and IMC Pty Ltd uses the weighted-average method to compute equivalent units.
On November 1, the Heating Department had in process 1,000 trays that were 70% complete. In November, it started the production of 12,000 trays. On November 30, 2022, 2,000 trays that were 60% complete were in process.
The following cost information for the Heating Department was also available. Word in process, November 1
|
Materials
|
$640
|
|
Conversion costs
|
$360
|
|
Cost of work in process, November 1
|
$1,000
|
The cost incurred in November
|
Material
|
$3,000
|
|
Labour
|
$2,300
|
|
Overhead
|
$4,050
|
Instructions
a) Prepare a production cost report for the Heating Department for November 2022, using the weighted-average method and explain why do IMC Pty Ltd using the weighted-average method.
b) Journalise the transfer of costs to the Stamping Department.