1,200 roasting hours
Viet Select: 4,000 pounds × 1.5 roasting hours per 100 pounds =
60 roasting hours
Blending hours:
Kenya Dark: 80,000 pounds × 0.5 blending hours per 100 pounds =
400 blending hours
Viet Select: 4,000 pounds × 0.5 blending hours per 100 pounds =
20 blending hours
Packaging hours:
Kenya Dark: 80,000 pounds × 0.3 packaging hours per 100 pounds =
240 packaging hours
Viet Select: 4,000 pounds × 0.3 packaging hours per 100 pounds =
12 packaging hours
Case 8-31 (continued)
Using the activity figures, manufacturing overhead costs can be assigned to the two products as
follows:
Kenya Dark
Activity Rate Expected Activity Amount
Purchasing ... $280 per order 4 orders $ 1,120
Material handling ... $193 per setup 32 setups 6,176
Quality control ... $180 per batch 16 batches 2,880
Roasting... $11 per roasting hour 1,200 roasting hours 13,200
Blending... $6 per blending hour 400 blending hours 2,400
Packaging ... $5 per packaging hour 240 packaging hours 1,200
Total overhead cost ... $26,976
Viet Select
Purchasing ... $280 per order 8 orders $2,240
Material handling ... $193 per setup 16 setups 3,088
Quality control ... $180 per batch 8 batches 1,440
Roasting... $11 per roasting hour 60 roasting hours 660
Blending... $6 per blending hour 20 blending hours 120
Packaging ... $5 per packaging hour 12 packaging hours 60
Total overhead cost ... $7,608
b. According to the activity-based costing system, the manufacturing
overhead cost per pound is:
Kenya
Dark Viet
Select
Total overhead cost assigned (above) (a)... $26,976 $7,608
Number of pounds manufactured (b) ... 80,000 4,000
Cost per pound (a) ÷ (b) ... $0.34 $1.90
c. The unit product costs according to the activity-based costing system
are:
Direct materials (given) ... $4.50 $2.90
Direct labor (given) ... 0.24 0.24
Manufacturing overhead ... 0.34 1.90
Total unit product cost... $5.08 $5.04
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