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Week 6 Question PDF

This document provides information about Ellix Company that manufactures two speaker models, the X200 and X99. It includes production details like direct labor hours and materials costs for each model. It also lists three overhead cost pools that have been identified for activity-based costing: machine setups, special processing, and general factory. The task is to calculate unit product costs for each model using traditional overhead rates based on direct labor hours and using activity-based costing rates based on the cost pools.

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Bella Seah
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358 views1 page

Week 6 Question PDF

This document provides information about Ellix Company that manufactures two speaker models, the X200 and X99. It includes production details like direct labor hours and materials costs for each model. It also lists three overhead cost pools that have been identified for activity-based costing: machine setups, special processing, and general factory. The task is to calculate unit product costs for each model using traditional overhead rates based on direct labor hours and using activity-based costing rates based on the cost pools.

Uploaded by

Bella Seah
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PDF, TXT or read online on Scribd
Download as pdf or txt
Download as pdf or txt
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ACCY211: Management Accounting II

Autumn Session 2011 Week 6 Topic 5: Activity Based Costing

eLearning Assignment Question:[A-5] Ellix Company manufactures two models of ultra-high fidelity speakers, the X200 model and the X99 model. Data regarding the two products follow: Direct Annual Total Direct Product Labor-Hours Production Labor-Hours X200 . 1.8 DLHs per unit 5,000 units 9,000 DLHs X99 0.9 DLHs per unit 30,000 units 27,000 DLHs 36,000 DLHs Additional information about the company follows: a. Model X200 requires $72 in direct materials per unit, and the model X99 requires $50. b. The direct labor rate is $10 per hour. c. The company has always used direct labor hours as the basis for applying manufacturing overhead cost to products. d. Model X200 is more complex to manufacture than model X99and requires the use of special equipment. e. Because of the special work required in (d) above, the company is considering the use of activity-based costing to apply manufacturing overhead costs to products. Three activity cost pools have been identified as follows:
Estimated EstimatedTotal Activity total cost X200 X99 Total

ActivityCostPool

ActivityMeasure

Machine setups Number of setups Special processing Machine-hours General factory Direct labor-hours

$360,000 180,000 1,260,000 $1,800,000

50 12,000 9,000

100 0 27,000

150 12,000 36,000

Required: 1. Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products. a. Compute the predetermined overhead rate. b. Compute the unit product cost of each model. 2 Assume that the company decides to use activity-based costing to apply overhead cost to products. a. Compute the activity rate for each activity cost pool and determine the amount of overhead cost that would be applied to each model using the activity-based costing system. b. Compute the unit product cost of each model. 3. Explain why overhead cost shifted from the high-volume model to the low-volume model under activity-based costing.

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