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Category > Accounting Posted 26 Sep 2017 My Price 10.00

Elton Company

Product costing in an activity-based costing system

Elton Company manufactures wheel rims. The controller budgeted the following ABC allocation rates for 2012:

Activity

Allocation Base

Cost Allocation Rate

Materials handling

Number of parts

$ 4.00 per part

Machine setup

Number of setups

500.00 per setup

Insertion of parts

Number of parts

23.00 per part

Finishing

Finishing hours

50.00 per hour

The number of parts is now a feasible allocation base because Elton recently purchased bar coding technology. Elton produces two wheel rim models: standard and deluxe. Budgeted data for 2012 are as follows:

 

Standard

Deluxe

Parts per rim

6.0

9.0

Setups per 500 rims

17.0

17.0

Finishing hours per rim

5.0

6.5

Total direct labor hours per rim

6.0

7.0

The company expects to produce 500 units of each model during the year.

Requirements

1. Compute the total budgeted indirect manufacturing cost for 2012.

2. Compute the ABC indirect manufacturing cost per unit of each model. Carry each cost to the nearest cent.

3. Prior to 2012, Elton used a direct labor hour single-allocation-base system. Compute the (single) allocation rate based on direct labor hours for 2012. Use this rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent.

Answers

Maurice Tutor
(5)
Status NEW Posted 26 Sep 2017 03:09 PM My Price 10.00

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