Question

WINEL Resea Brown Inc, manufactures and distributes two types of household items. The items, Mops and Dusters, are manufactured on a common assembly line by the same direct labourers. Different direct materials are used in each type, and the machinery is retooled for each product. Until now, manufacturing overhead costs have been allocated on the basis of direct labour-hours using a plantwide rate. However, the production manager has been reading about ABC and wishes to institute it for Brown's production operations. To that end, she has assembled the following information regarding production activities and manufacturing overhead costs for the month of September: Activity Cost Pool Materials handling Machining Assembly Inspection Direct materials Direct labour Cost Driver (activity base) Number of parts Machine-hours Units started Units tested Allocation Rate $ 1.00 per part $11.00 per machine-hour $ 1.80 per unit $ 2.00 per unit Activity Usage Mops Dusters 2,300 parts 1,600 parts 235 machine-hours 345 machine-hours 1,150 units 1,600 units 115 units 1.500 units $ 5,750 $ 3,200 $13,800 $13,800 Each product consumed 690 direct labour-hours. Required: 1. Using ABC, determine the total manufacturing cost and cost per unit for each of the two product lines for September, assuming that all units were started and completed in September. (Round "Cost per unit answers to 2 decimal places.) Mops Dusters Total manufacturing cost Cost per unit 2. Using the plantwide rate to allocate manufacturing overhead, determine the total manufacturing cost per unit for each of the two product lines for September, assuming that all units were started and completed in September. (Round "Cost per unit" answers to 2 decimal places.) Mops Dusters Total manufacturing cost Cost per unit wwwwwwwwwwwwwwwwww

Answer 1

1)			Allocation	mops	overhead	dusters	overhead
	Activity cost pool		rate	usage	allocated	usage	allocated
	materials handling		1	2300	2300	1600	1600
	Machining		11	235	2585	345	3795
	Assembly		1.8	1150	2070	1600	2880
	inspection		2	115	230	1500	3000
	total overhead d				7185		11275
	total manufacturing cost
					Mops	dusters
	Direct materials				5,750	3,200
	direct labor				13,800	13,800
	overhead allocated				7185	11275
	total manufacturing cost				26,735	28,275	55,010
	units started and completed				1150	1600
	cost per unit				23.25	17.67
					Mops	Dusters
	total manufacturing cost				26,735	28,275
	cost per unit				23.25	17.67
2)	total manufacturing cost
					Mops	dusters
	Direct materials				5,750	3,200
	direct labor				13,800	13,800
	overhead allocated				9230	9230
	total manufacturing cost				28,780	26,230
	units started and completed				1150	1600
	cost per unit				25.03	16.39
					Mops	Dusters
	total manufacturing cost				28,780	26,230
	cost per unit				25.03	16.39