Homework answers / question archive / P8

P8

Accounting

Share With

P8.33 Traditional end activity-based product costing: manufacturer Lo a.5 fl, 8.524 
The accountant for Snappy Photographic Supply Ltd has estimated the following activity cost pools and activity drivers for the 
coming year: Budgeted Budgeted level for Cost per unit of Activity overhead coat Activity driver activity driver activity driver Machine setups $300000 No. of setups 100 $3000 per setup Material handling 150 000 Weight of raw material 50 000 kilograms S3 per kilogram Hazardous waste contra! 75 000 Weight of hazardous chemicals used 10 0001ulograms 57.50 per kilogram Quality control 112 500 NO of inspections 1 000 5112.30 per insptcton Other overhead costs 300 000 Machine hours 20 000 $15 per machine hour Total 5937 500 
An order for 1000 boxes of film development chemicals has the following production requirements: 
Machine setups 4 setups Raw material 100001tilogram Hazardous materials 2000 kilograms Inspections 10 inspections Machine hours 500 machine hours 
Require. 1. Calculate the total overhead that should be assign. to the order for development chemicals. 2. What is the overhead cost per box of chemicals, 
3. If Snappy Photographic Supply were to use a plantwide predetermined overhead rte based on machine hours, pa. 392 calculate the rate per hour. 4. Under the approach in requirement 3, how much overhead would be assigned to the order for development chemicals: (a) in total (b) per box of chemicals? 5. Explain why these two product costing systems result in such widely differing costs. Which system do you recommend? SWiy? 6. Calculate the unit cost of a production order for 100 specially coated plates used in film development. In addition to direct mat.. costing $180 Per plate and direct labour costing $60 per plate, the order requires the following: 
Machine setups 2 ...Pips Raw material 600 kilograms Hazardous materials 300 kilograms Inspections 3 inspections Machine hours 30 machine hours