Q41PGB_1 Martin, Inc. manufactures bookca... [FREE SOLUTION]

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Chapter 19: Q41PGB_1 (page 1081)

Martin, Inc. manufactures bookcases and uses an activity-based costing system. Martin鈥檚 activity areas and related data follow:
Activity
Budgeted Cost of Activity
Allocation Base
Predetermined Overhead Allocation Rate
Materials handling
$ 230,000
Number of parts
$1.50
Assembly
3,200,000
Number of assembling direct labor hours
16.00
Finishing
150,000
Number of finished units*
3.00
*Refers to the number of units receiving the finishing activity, not the number of units transferred to Finished Goods Inventory
Martin produced two styles of bookcases in April: the standard bookcase and an unfinished bookcase, which has fewer parts and requires no finishing. The totals for quantities, direct materials costs, and other data follow:
Product
Total Units Produced
Total Direct materials Costs
Total Direct Labor Costs
Total Number of Parts
Total Assembling Direct Labor Hours
Standard bookcase
3,000
$54,000
$67,500
9,000
4,500
Unfinished bookcase
3,500
56,000
52,500
7,000
3,500
Requirements
1. Compute the manufacturing product cost per unit of each type of bookcase.

Short Answer

Expert verified

Manufacturing cost per unit

For Standard bookcase: $72

For Unfinished bookcase: $50

Step by step solution

Step-by-Step-SolutionStep 1: Computation of manufacturing product cost for Standard bookcase

$Total material handling cost = Predetermined overhead allocation rate 脳 No . of parts used for standatrd book case = $ 1.5 脳 9, 000 = $ 13, 500$

$Total assembling cost = Predetermined over head allocation rate 脳 No . of assembling direct labor hours for standatrd book case = $ 16 脳 4, 500 = $ 72, 000$

$Total finishing cost = Predetermined overhead allocation rate 脳 No . of finished units for standatrd book case = $ 3 脳 3, 000 = $ 9, 000$

$Total overhead cost = Total material cost + Total assembling cost + Total finishing cost = $ 13, 500 + $ 72, 000 + $ 9, 000 = $ 94, 500$

role="math" localid="1653286682222" $Total manufacturing cost for standard book case = Direct material cost + Direct labor cost + Overhead cost = $ 54, 000 + $ 67, 500 + $ 94, 500 = $ 216, 000$

role="math" localid="1653286799830" $Manufacturing cost for per unit = \frac{Total manufacturing cost}{No . of units produced} = \frac{$ 216, 000}{3, 000} = $ 72$

Computation of manufacturing product cost for Unfinished bookcase

$Total material handling cost = Predetermined overhead allocation rate 脳 No . of parts used for unfinished book case = $ 1.5 脳 7, 000 = $ 10, 500$

$Total assembling cost = Predetermined overhead allocation rate 脳 No . of assembling direct labor hours for unfinished book case = $ 16 脳 3, 500 = $ 56, 000$

$Total overhead cost = Total material cost + Total assembling cost = $ 10, 500 + $ 56, 000 = $ 66, 500$

$Total manufacturing cost for unfinished book case = Directmaterial cost + Direct labor cost + Over head cost = $ 56, 000 + $ 52, 500 + $ 66, 500 = $ 175, 000$

$Manufacturing cost for per unit = \frac{Total manufacturing cost}{No . of units produced} = \frac{$ 175, 000}{3, 500} = $ 50$

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	Material Handling	Machine Setup	Insertion of Parts	Total
Overhead costs	\) 45,000	\( 136,000	\) 540,000	$ 721,000
Allocation base	Number of parts	Number of setups	Number of parts
Expected usage:
Basic Model	32 parts per calculator	24 setups per year	32 parts per calculator
Professional Model	58 parts per calculator	44 setups per year	58 parts per calculator

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Short Answer

Step by step solution

Step-by-Step-SolutionStep 1: Computation of manufacturing product cost for Standard bookcase

Computation of manufacturing product cost for Unfinished bookcase

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Activity	Budgeted Cost of Activity	Allocation Base	Predetermined Overhead Allocation Rate

Materials handling	\( 230,000	Number of parts	\)1.50
Assembly	3,200,000	Number of assembling direct labor hours	16.00
Finishing	150,000	Number of finished units*	3.00

Product	Total Units Produced	Total Direct materials Costs	Total Direct Labor Costs	Total Number of Parts	Total Assembling Direct Labor Hours

Standard bookcase	3,000	\(54,000	\)67,500	9,000	4,500
Unfinished bookcase	3,500	56,000	52,500	7,000	3,500