Direct materials cost $ 80.00 Direct labor cost 20.00 Activity-based casts allocated Total manufacturing product cost The activities required to build the component follow: Activity Allocation Base Cost Allocated to Each Unit Start slation Number of raw component chassis $ 1.50 4 $ 6.00 Dip insertion Manual insertion Number of dip insertions 0.30 9.60 Number of manual insertions 10 0.50 Wave solder Number of components soldered 1.90 7.60 Backload Number of backload nserticns 4.20 %3D Test Number of testing haurs 0.43 90.00 Defect analysis Total activity-hased costs Number of defect analysis hours 0.15 12.00
Direct materials cost $ 80.00 Direct labor cost 20.00 Activity-based casts allocated Total manufacturing product cost The activities required to build the component follow: Activity Allocation Base Cost Allocated to Each Unit Start slation Number of raw component chassis $ 1.50 4 $ 6.00 Dip insertion Manual insertion Number of dip insertions 0.30 9.60 Number of manual insertions 10 0.50 Wave solder Number of components soldered 1.90 7.60 Backload Number of backload nserticns 4.20 %3D Test Number of testing haurs 0.43 90.00 Defect analysis Total activity-hased costs Number of defect analysis hours 0.15 12.00
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter6: Process Costing
Section: Chapter Questions
Problem 14E: Lacy, Inc., produces a subassembly used in the production of hydraulic cylinders. The subassemblies...
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Question
Computing product costs in an ABC system
The Alright Manufacturing Company in Rochester, Minnesota, assembles and tests electronic components used in smartphones. Consider the following data regarding component T24 (amounts are per unit):
Requirements
- Complete the missing items for the two tables.
- Why might managers favor this ABC system instead of Alright’s older system, which allocated all
manufacturing overhead costs on the basis of direct labor hours?
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